5 Common Misconceptions About Crypto

It‘s important to have an understanding of what is and isn't true concerning crypto to protect yourself from false advertisements and be up-to-date on the ever-evolving world of cryptocurrency.

5 Common Misconceptions About Crypto

As the cryptocurrency market has continued to grow over the years, many misconceptions have quickly turned into “false facts”, especially amongst individuals who may be new, sceptics or unfamiliar with cryptocurrency.

Cryptocurrency is a diverse space and there have been several changes to these networks over the past few years. As such, there have also been several common falsehoods circulating cryptocurrency, many of which you may have heard before.

Today we will be debunking these myths and highlighting some of the most common misconceptions about cryptocurrency.

  • Cryptocurrency is anonymous
  • Cryptocurrency doesn’t have any backing
  • It’s complicated to use cryptocurrency
  • Governments don’t recognize cryptocurrency
  • It’s very easy to get your cryptocurrency stolen

1. Cryptocurrency is anonymous

Although being one of the most common things you might hear about cryptocurrency, it is pretty far from the truth.

The genesis of this idea sprung from the fact that users may not require their name or any other form of identification to use cryptocurrency.

Many people assume that transactions carried out on public domains such as the Bitcoin blockchain would be entirely untraceable because of this.

Although many public blockchains such as Bitcoin do not require any formal means of identification, there is a detailed trail of every transaction that occurs on these networks that can be linked to an IP address, providing an identity link to the user.

2. Cryptocurrency has no solid backing

Another thing you may have heard about cryptocurrency is that it is a highly unstable market with no solid backing. This is rooted in the fact that many people do not understand how cryptocurrency is valued.

Ever since its launch fourteen years ago, the cryptocurrency market has continued to grow exponentially, with Bitcoin and other assets gathering a huge following and demand.

The combined effort of the usability and accessibility of most coins have given us a clear understanding of how it is valued, and why coins like Bitcoin, with millions of users, have a solid foundation.

There is a subcategory of coins called stablecoins that use more traditional reserves to back their value such as gold or USD.

Most cryptocurrencies however derive their value from usability, a good example being Ether. As the cryptocurrency market grows, it will continue to be backed by its million-dollar market.

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3. It’s complicated to use cryptocurrency

Unlike what you may often hear about using or accessing cryptocurrency, it’s way less complicated than you might think. You don’t need to be tech-genius or have immense knowledge of blockchains to use cryptocurrency. If you know how to use your smartphone, then you’re already tech savvy enough to use crypto.

With the introduction of technology like wallets and cryptocurrency exchange websites/apps, buying and accessing crypto has become an easier process in today’s world.

Many digital assets like Bitcoin and Ethereum do not require anything other than a basic understanding of exchange to use, and with the endless amount of resources available online today you can easily assess more technical knowledge on blockchain and cryptocurrency.

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4. Governments do not recognize cryptocurrency

Although several nations are yet to get on the cryptocurrency train, many other prominent world powers have picked up interest, creating policies, and regulations and even going as far as making cryptocurrency legal tenders in their nation.

Countries like El Salvador, Japan, Switzerland, and even Singapore have begun adopting the idea of blockchain assets as reserves and an efficient way to cut operations costs.

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El Salvador is one of the most crypto-forward nations, creating an open space for the exchange of Bitcoin by making it a legal tender. This means their citizens can make any transaction with Bitcoin.  You can even make legal payments with Bitcoin in Japan as well. Other countries like Singapore have also joined in the integration of crypto into their economies by applying minimal taxation on non-business transactions.

As more world heads begin to show interest, other nations around the world would likely follow suit, recognizing that cryptocurrency is here to stay.

5. It’s very easy to get your cryptocurrency stolen

There’s often a lot of negative press about cryptocurrency getting stolen, making it seem like the task of securing your assets is a difficult or impossible one, but this is just another crypto myth to be debunked.

In today's world, tools like multifactor authentication and hardware wallets make it simpler to keep your crypto assets safe from scammers. You can also use safe and secure cryptocurrency exchanges to carry out your transactions.

With the right steps, you can significantly minimise the chances of your coins getting stolen.

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It’s important to carry out your safety precautions when dealing with crypto such as researching the coin and ensuring your password/key phrase/2FA and other sensitive information is not disclosed to the public. This is no different from how you would secure your regular currency in your bank account.

To Wrap Up

Cryptocurrency is a growing market with immense potential and endless possibilities. As more countries begin to open the doors of their economy to crypto, we will continue to see massive growth in trade and demand.

It‘s important to have an understanding of what is and isn't true concerning crypto to protect yourself from false advertisements and be up-to-date on the ever-evolving world of cryptocurrency.

Disclaimer: This article was written by the writer to provide guidance and understanding of cryptocurrency trading. It is not an exhaustive article and should not be taken as financial advice. Obiex will not be held liable for your investment decisions.