The cryptocurrency and blockchain world have been growing exponentially over the last decade. With many people getting involved in this exciting space, it’s easy to understand why there are so many misconceptions about it.
This article will set the record straight and debunk the common misconceptions plaguing the crypto ecosystem. Here are some of the common misconceptions about crypto:
Cryptocurrency Is Hack-proof
While cryptocurrencies aren’t hack-proof, they offer additional security features that traditional fiat currencies don’t provide. For example, if you lose your paper money or forget your credit card PIN code, there’s no way to get it back.
With cryptocurrency, the digital assets are stored on a blockchain network. They remain in their original digital form even if lost or stolen, and the hacker would only be able to access them by using your private key.
The blockchain also has built-in security measures like multi-signature accounts (where more than one person must authorise transactions) and irreversible transactions (so that once something is sent out as bitcoin or another coin, it can’t be altered).
Cryptocurrency Transactions Are Untraceable
Although cryptocurrencies are often associated with anonymity, it’s important to remember that cryptocurrency transactions aren’t anonymous. Instead, they’re pseudonymous: There’s a record of every transaction on public ledgers.
In addition to this, blockchain analysis can be used to trace transactions back to their source wallet or owner through an analysis of network activity. Private key analysis also allows individuals to determine which wallets were involved in specific transactions.
Mining Cryptocurrency Is Easy
Mining cryptocurrency isn’t easy. It’s like winning the lottery; you need many things to fall into place just right to do it.
You first need an expensive computer with a lot of processing power, costing thousands of dollars (or more).
The second thing you need is electricity and internet access so that your computer can run day and night looking for new coins on its own.
Finally, if all this work pays off and results in some new coins being mined, which happens only every few minutes, then they’re going to be worth next-to-nothing until they’ve either been sold or used as currency.
You Can’t Use Cryptocurrency To Make Purchases Online And Offline
You can use cryptocurrency to make purchases at stores and online if you want to buy something, whether a cup of coffee or a new car. You can do so at any time.
Cryptocurrency is just like cash: You only spend what you have in your digital wallet. Plus, there are no transaction fees when you use it as payment because there isn’t a middleman involved like with credit and debit cards.
It Is Inaccessible Without A Computer
You don’t have to be a computer whiz to use cryptocurrency. Many people use cryptocurrency because it’s easy to set up and get started with.
To start with cryptocurrency, you’ll only need an internet connection and a device that can connect to the internet. Once you have those two things, you can send money through an app on your phone or computer called an ‘exchange.’
At this point, there are many different exchanges where you can purchase cryptocurrency directly by using your credit card or other forms of payment such as cash or cheques.
The Price of Cryptocurrency Is Unaffected By Outside Forces
You’ve probably heard that the price of cryptocurrency is unaffected by outside forces. This misconception is so common that it’s practically become a cliché.
But while it’s true that cryptocurrencies are mainly unregulated and thus not controlled by central banks, they’re still affected by numerous factors, and some of those factors come from outside the industry itself.
Government regulations can have an impact on cryptocurrency prices. Governments can ban exchanges from operating within their borders or require them to obtain licenses or abide by new tax laws before they can operate legally in the country in question. Both actions would affect how people perceive cryptocurrencies and make them more expensive or less.
Cryptocurrency Investments Are Unregulated
It’s important to understand that cryptocurrency exchanges have many regulations in place as in some countries.
However, it’s also true that some countries haven’t yet passed any regulations on these new technologies. For example, China recently banned initial coin offerings (ICOs). This uncertainty surrounding regulation has created an environment where people may believe they don’t need any protection from fraud or misrepresentation when investing in cryptocurrencies.
Although the cryptocurrency market has some similarities to the traditional financial market, it’s still a new and evolving space. This means that even experienced analysts can have misconceptions about how markets operate, which can make it difficult to predict future trends or understand what’s going on in current events.