Top 5 Crypto Myths : Is There Anything To Them?

Cryptocurrency has made quite the name for itself, but unfortunately it’s also attracted its fair share of myths, some more unfounded than others.

Despite its inception back in 2009 with the advent of Bitcoin, it seems it hasn’t been able to shake some of the less favourable opinions circulating it.

Myth 1: Cryptocurrency Doesn’t Hold Any ‘Real’ Value

A lot of people are under the assumption that cryptocurrency isn’t valuable in the way ‘traditional’, fiat money is. This is the most easily debunked of the common myths, as the value of digital currencies is very real, though fluctuates much more quickly than fiat money.

While the U.S dollar, for example, may experience slight changes in value over the years, digital currency like Bitcoin might experience extreme value growth and decline in a matter of hours.

Myth 2: Cryptocurrency is Mostly Used by Criminals

While criminals can, and certainly do use cryptocurrency, the same can be said for any type of currency in the world. Criminals also use fiat money in illicit activities.?A report by Chainalysis?notes that in 2021 just 0.15% of cryptocurrency transactions were linked to illicit activity.

Unfortunatey, the number of rug pulls- or crypto projects which raise large amounts of money then disappear- has grown. Despite that, it’s obvious cryptocurrency is not just for criminals as the majority of it is not used in illegal activities.

Myth 3: Cryptocurrency Isn’t Secure

Cryptocurrency exchanges are protected by blockchain technology, which is extremely difficult to hack or alter. Blockchain runs on a decentralized ledger built up by blocks of encrypted data, which keeps permanent records of every transaction.

While it’s possible to participate in less safe ways of handling your crypto wallet, there are many legitimate, and safe ways to buy and sell your digital currencies. The technology it uses is nearly impossible to hack into, so the likelihood of your money being stolen is low if you approach it safely and responsibly.

Myth 4: Cryptocurrency Will Replace Fiat Money

Whether or not this will ever come to be is unknown, but it’s pretty unlikely.?Investopedia makes a good point?in that people are not likely to ditch money they know and understand in favor of something so new and alien as cryptocurrency.

Because of the decentralized nature of cryptocurrency, governments are less likely to favor or adopt it, as it goes against the traditional way of managing money and things like taxes. While it’s not likely it will replace fiat money, it is slowly becoming more and more mainstream.

Myth 5: You Don’t Need To Pay Taxes on Cryptocurrency

Back when Bitcoin first launched in 2009, transactions were anonymous and untraceable, and as such impossible for the government to track in order to tax. This didn’t last long, and now the majority of crypto transactions are completely transparent so as to avoid getting in trouble.

The rules surrounding taxes and cryptocurrency can get pretty tricky to understand, and it’s worth having a look at what the IRS requires depending on your particular circumstances before making any assumptions.

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