Since the launch of bitcoin in 2009, good and bad things have happened in the crypto industry. And we’ve reached a point where users often can’t separate the good from the bad and the true from the false. Many crypto myths have been made public, and they are confusing crypto enthusiasts all over the world.
And addressing them is increasingly relevant as cryptocurrencies have become so popular that not so many people have heard of them yet. And if they didn’t, they probably didn’t have access to any kind of news.
In this article, we will debunk some of the most popular cryptocurrency myths so that no user is misled again.
Crypto Myth 1: Cryptocurrency is only used for illegal purposes
This myth is as false as many of us might think. If cryptocurrencies are only used for illegal activities, why would 97% of the world trust them? Binance Study Prove that crypto is more secure than ever.
Just imagine that every day more and more companies are starting to accept payments in digital assets. Do you think so many teams would do that if they knew it could put their companies at risk?
On the other hand, the crypto myth states that crypto is only used for illegal purposes. And considering this, it is necessary to mention that there are still shady projects that users should always be aware of. For example, initial offerings are a type of crypto project that has, unfortunately, seized an astonishingly high amount of money through scams.
However, everyone is constantly working on improving the security of cryptocurrencies; Hence, these matters will not be a major concern in future.
Crypto Myth 2: Cryptocurrencies are Unregulated
This cryptocurrency myth is only partially true. Usually, it depends on the project, as some are regulated while others are not.
For example, cryptocurrency exchanges are partially regulated, but it depends on each country and its sentiment about the crypto world.
Bitcoin, on the other hand, began as a decentralized project, primarily focused on developing a secure but unregulated payment system. And it brought a lot of advantages for the users all over the world. Cryptocurrency has made it easier for users to complete online purchases, as crypto payments are not governed by any regulation, at least in the case of some cryptocurrencies.
Crypto Myth 3: The price of cryptocurrencies is driven by supply and demand
As you’ve probably noticed, when it comes to crypto myths, there are words like “partially,” “in some cases,” or “half-true/false” because most of the myths built around crypto are true in some respects. and lies in others. And this happens because of the amazingly developed industry. There are a tremendous number of crypto projects, and each works in its own way with its own rules or practices.
This also applies to the “supply versus demand” story. The prices of some cryptocurrencies can actually be driven by supply and demand. However, not all of them work this way. It really depends on the maximum supply of a specific cryptocurrency.
For example, Ethereum (ETH) does not have a maximum supply; Thus, its price will not be related to its supply or demand like other coins. However, ETH transaction fees are changing in value based on supply and demand.
Crypto Myth 4: All Transactions Are Anonymous
The privacy provided by cryptocurrencies often leads users to think that everything that happens during crypto transactions is anonymous. However, it depends.
When Bitcoin was launched, the project promoted the idea of anonymity, as transactions could be done through peer-to-peer processes; Thus, no third party is ever involved in the transaction.
Nevertheless, all transactions are still stored on the blockchain. And for each process, the wallet addresses of both parties will be recorded. Considering the fact that a blockchain is open to the public, this means that transactions are not completely anonymous, instead it is considered pseudo-anonymous.
Crypto Myth 5: Crypto Gains Are Not Taxed
It may seem like crypto is not taxable, but this myth about cryptocurrencies couldn’t be further from the truth.
In fact, crypto gains are taxed, and every transaction on exchanges is usually reported to financial institutions depending on the country. Every transaction or exchange based on crypto becomes a taxable process that needs to be reported as a capital gain. Moreso, any crypto payment received by anyone or crypto received through staking is also taxable as ordinary income.
However, if a user has purchased crypto using fiat but has not completed any other transactions with the amount purchased, they do not need to report it.
Of course, taxation varies from country to country. Typically, only capital received is taxed, but check local laws to be sure.
Crypto Myth 6: Bitcoin is Bad for the Environment
This crypto myth also relies on information about the energy source used for cryptocurrency processes.
Concerns about the impact of bitcoin on the environment have been caused by the computational power required to complete transactions or mining. Verifying and validating bitcoin transactions requires an enormous amount of energy, sometimes equal to the energy consumed by a small country.
As long as the energy comes from sustainable sources, there is no need to worry about how bitcoin transactions will affect the environment. However, concerns come as the electricity comes from fossil-fuel-powered grids as the carbon emitted will affect the environment to a much smaller proportion.
Crypto Myth 7: Cryptocurrency is Clean and Green
Here it is – a myth that is closer to being true than of a lie.
Actually, making crypto coins does not require paper, silver or gold, as in fiat currency. Trees cut for banknotes or mining processes to obtain gold incur huge costs, all for the manufacture of money. Also, don’t forget that some countries still use plastic for their bills.
However, mining cryptocurrency still requires some resource: energy. The computational power required to mine crypto can sometimes reach the energy used by some smaller countries; Thus, it is easy to feel that the energy consumed is too much.
For example, the annual energy consumption of bitcoin reaches the United Arab Emirates with an average of about 97,3 GWh per year.
Debunking Cryptocurrency Myths
With the growing popularity of cryptocurrencies, there is more surprising information about this industry than ever before. However, not everything that has been said about crypto is true.
Many cryptocurrency myths have spread over time, and it is important to find out which are true and which are not. Furthermore, some crypto myths are only half true; Thus, there is always a need for additional information to know which actions are best when investing in crypto.
We hope these debunked crypto myths helped you better understand cryptocurrencies and the ways they work and (or not) affect the environment.
Information: The information contained in this article and the links provided are for general information purposes only and should not constitute any financial or investment advice. We recommend that you do your own research or consult a professional before making a financial decision. Please accept that we are not responsible for any damages caused by any information contained on this website.