6 Myths About Cryptocurrency To Stop Believing

6 Myths About Cryptocurrency To Stop Believing

The world of cryptocurrencies is relatively new to financial markets. Bitcoin, for example, the most well-known digital currency today, was born in 2008 and only really became popular a few years later, gaining value over time and undoubtedly capturing the world’s attention. This is just one cryptocurrency that exists among many other cryptocurrencies that are as popular and worth as much as Bitcoin.

Today, many people and companies often talk about cryptocurrencies, but that hasn’t stopped some of the myths about the subject from being spread. Also, right and wrong information has been spreading over time, which requires clarification to know what is true and false in this medium.

That’s why we’ve listed six myths about cryptocurrencies you need to know. This knowledge is especially useful if you want to invest in these popular digital assets right now.

Myth #1 — Cryptocurrencies don’t work like real money

The International Monetary Fund (IMF) defines the concept of money as a store of value, a widely accepted unit of account or medium of exchange that can be converted into value. Based on this, we can say that Bitcoin, Ethereum, and other cryptocurrencies meet the requirements of what is money, and can be viewed as such.

However, it is important to understand what cryptocurrency we are talking about and if there is any support associated with it. A ballast is a tangible and tactile thing that guarantees the value of an asset. Until the 1970s, every dollar issued was backed by gold representing that amount. Today, it’s no longer about the money, but the concept is still there.

For example, Bitcoin is not backed by anything, but it is a widely accepted digital currency that some companies and individuals have adopted as a payment method for products and services. Ethereum, ripio coins and other cryptocurrencies are also not supported, but they can be used for certain types of transactions.

While they have no physical counterparts, there are also no ether notes, for example, some cryptocurrencies can be used to buy and sell things, making them actually considered real money.

However, the same does not happen with other cryptocurrencies, such as many altcoins (digital alternatives to bitcoin) and memecoins (digital currencies inspired by meme). So it’s good to be careful.

Myth 2 – Cryptocurrency is a financial bubble

LipioCould it be that we are facing a financial bubble and we don’t know it? (Ripio/Disclosure)

A financial bubble is defined as an inflation of asset prices rather than staying at that particular value. This phenomenon emerged in the U.S. housing market in 2008, when simple suburban homes sold for as much as luxury homes. Real estate quickly depreciated in value as the market was flooded with homes for sale without buyers, triggering the 2008 financial crisis.

Bitcoin is often referred to as the “new version of tulip mania,” a financial bubble that occurred in the 17th century involving the value of these flowers. However, cryptocurrencies, unlike real estate and tulips in many ways, are completely immune to this situation.

While cryptocurrencies can appreciate well above their true value and then become worthless, some of them work in a similar way to precious metals. These assets represent an entirely different store of value, and are unlikely to become worthless even if they depreciate significantly, or even be replaced by a fundamentally superior asset.

Also, the price of coins is regulated by the market itself, which helps prevent such problems from happening – although it is possible.

Myth #3 — Unable to track cryptocurrencies

The idea of ​​cryptocurrencies is to decentralize the financial system from the big banks and institutions that control money. The goal is not to create a means to conduct illicit transactions and crimes through digital assets, but to enable and maintain a secure exchange of value for products and services across the network.

The blockchain concept shows how to track cryptocurrency transactions. Each block of transactions in a digital currency contains information from the previous block, and so on. In this way, the data contained in each block is guaranteed to be authentic, just by checking the block that produced it.

As a result, every blockchain record is public and people are arrested for paying ransoms via Bitcoin. This is possible because it is possible to view the transaction history of any wallet and reach the operating exchange (the company responsible for managing the digital wallet).

As if that wasn’t enough, there is no way to withdraw cryptocurrency anonymously. For this, you need to use the aforementioned exchange, which is a brokerage business and requires personal and financial information to conduct business.

In fact, only physical currency can be used truly anonymously and in many ways untraceable. However, cryptocurrency transactions are listed on the blockchain and are publicly available for everyone to track and analyze — it is the ownership of the wallet that remains anonymous.

Myth 4 – Cryptocurrencies can disappear at any time

LipioPhysical assets like Bitcoin and Ethereum will never disappear out of thin air. (Ripio/Disclosure)

Can you imagine waking up to find all the money in your digital wallet is gone? While that’s a scary description, it’s as unlikely as imagining that the bank’s money would suddenly disappear too.

Indeed, some digital assets of the past have literally disappeared. However, these are all cases of malicious people exploiting the naivety and ambition of those who decided to invest in the asset they didn’t even know they were buying.

Contrary to what many people think, digital currency does not necessarily represent a trap, fraud or scam to deceive people. As mentioned earlier, cryptocurrencies can have real value, just like the dollar and the euro, these currencies are also no longer backed by any physical asset.

The existence and validity of some cryptocurrencies are so real that many banks and large investment firms have huge wallets that store the digital currency. These institutions have learned the value of this “digital gold” and are depositing large amounts because they know it’s worth it.

Myth #5 – Governments can ban cryptocurrencies altogether

Indeed, some countries have tried to block and ban cryptocurrency transactions. However, none of these attempts have attacked the principle behind these digital assets, which is complete independence from governments or other controlling bodies.

After all, the creation of cryptocurrencies does not depend on a central system (such as a bank) to function. Governments can even ban public companies and other state institutions from trading these digital currencies, but that won’t prevent transactions between people (peer-to-peer or P2P, as it’s called) and between private organizations. Such bans can even lead to asset appreciation.

Not only is a country unlikely to succeed, it’s also not interesting to take such a position. In fact, some countries, such as Brazil, have recognized the value of cryptocurrencies and have incorporated them into their formal procedures to declare the value of digital assets.

Myth #6 — Cryptocurrencies are only for crime

LipioThe truth is that criminals use this novelty for their financial trap. (Ripio/Disclosure)

One of the oldest and most compelling myths about cryptocurrencies is that they are only used for illicit activities. While it is true that these digital assets are involved in many crimes committed by individuals or criminal organizations, so are any form of currency that has ever been used throughout history.

Cryptocurrencies can indeed be used anonymously, and criminals can demand the value in these coins as a ransom. However, as explained, transactions can be traced, thus preventing illegal activities carried out in this way.

Therefore, recent research shows that only 0.15% of Bitcoin transactions in 2021 will be related to criminal activity. In 2020, the proportion was 0.62%, and it was the highest in 2019, reaching 3.37%. This is a very low number, indicating that cryptocurrencies can be used for more activities than crime.

So the problem isn’t that cryptocurrencies fuel crime — that’s also not true. The problem is that criminals are always trying to take advantage of people with whatever resources are available.

Where can I learn more about cryptocurrencies?

LipioRipio, the ideal platform to start your journey in the crypto space. (Ripio/Disclosure)

These are just some of the myths associated with cryptocurrencies. There are many other lies, just look for the right source of information to keep learning.

Where can we find this information and start our journey in the cryptocurrency space? Ripio is one of the most popular and widely used access platforms in the digital asset world. Besides offering an intuitive interface and system, it also provides you with a marketplace and a digital wallet to manage your cryptocurrencies.

Ripio lists multiple cryptocurrencies such as Bitcoin, Ethereum, USD Coin, dai, Litecoin, etc. Additionally, the company has its own digital currency, ripio coin (RPC), an Ethereum-based community token (ERC-20). With this asset, you can not only buy and sell RPC like any other digital currency, but also enjoy other benefits.

Recent and trending cryptocurrencies and digital assets such as Non-Fungible Tokens (NFTs), Metaverse, and Decentralized Finance (DeFi) are also available on the platform.

Ripio is the perfect place for those who want to start their journey through cryptocurrencies, and it offers a page full of guides and educational materials to help with learning. Worth a try and get to know Ripio better.

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