Myths About Cryptocurrencies in [year]: The popularity of cryptocurrencies has increased over the past few years. The crypto market is thought to be rewarding, but it is also a crazy ride. With the latest market crash, many coins have already vanished. But the innovative technology that powers crypto will change how people think about money and finance.
Due to their complexity, cryptocurrencies are the subject of many myths and stereotypes. Crypto mining has come under scrutiny for its potential to encourage unlawful behavior as well as its effects on the environment. Furthermore, many people don’t even think cryptocurrencies have any intrinsic worth.
Let’s understand some top Myths About Cryptocurrencies in 2023
Myth #1 Cryptocurrencies Are Used For Criminal And Illicit Purposes
Myths About Cryptocurrencies in [year]: One of the biggest concerns that authorities have around cryptocurrencies is money laundering. Cybercriminals laundered $8.6 billion worth of cryptocurrency in 2021, the report said. It added that money laundering activity in cryptocurrency is heavily concentrated.
Although it is somewhat true that people first used cryptocurrencies on the dark web for illegal and morally dubious activities, the current crypto ecosystem is miles away from that. In fact, less than the traditional banking industry, only 0.34% of cryptocurrency transactions in 2020 were illicit, according to a report by Chainalysis.
The dubious and illegal side of cryptocurrencies
Cryptocurrencies serve as a financial enabler for a multitude of illegal and disreputable purposes such as:
- Money laundering
- Drug trafficking
- Human trafficking
- Child exploitation
- Dark marketplace trading
- Terror funding
5 Reasons Why illicit and criminal activities to Cryptocurrencies
1. The promise of anonymity
While all transactions that occur on the blockchain are kept on the public record and are accessible to anyone for review, the identities of transaction makers remain unknown. Transactions are made from one or more crypto addresses to one or more destination addresses. A crypto address is a random set of characters roughly the crypto equivalent of a bank account number.
2: No strings attached
Cryptocurrencies are transferred between peers, with no former acquaintance between the parties required. No third party is involved or needed as a mediator. This is largely exploited by criminals for one-off sales of drugs or digital data as well as for terror funding across borders.
3: Unmatched access and speed
Trading with crypto is so easy. It requires just an internet connection, a wallet application that is quickly and easily downloaded to your device or just using a cloud service, and…that’s it. In a few clicks, you can transfer money, or a monetary equivalent, anywhere in the world.
4: Easy storage and transfer
As digital assets, cryptocurrencies are easily stored. The storage of the crypto wallet information requires no physical space, as opposed to piles of bills. This means that they do not attract the attention of thieves, nor, most importantly criminals, of the authorities. Cryptocurrencies are also easy to transfer, both locally and internationally, with no risk of being seized.
Cryptocurrencies can be transferred quickly and easily from one crypto address to another, whether they serve the same person or totally different parties, locals or foreigners, acquaintances, or strangers. They are easily transferred globally, thus enabling international trading, which, in the criminal setting, translates to trafficking.
Myth #2 Cryptocurrency Is Not Taxed
Myths About Cryptocurrencies in [year]: Yes, there is no central authority involved and there are no banks involved. But this does not rule out that digital currency evades being taxed. It is just any other transaction and you are taxed whenever you sell it or whenever someone pays you in cryptocurrency.
In Union Budget 2022, the Finance Minister announced the cryptocurrency tax in India at a flat rate of 30 percent on any income from the transfer of VDAs. Additionally, another section 194S dedicated to the treatment of Tax Deducted at Source (TDS) in the event of a transfer of a VDA was also announced.
In India, when you trade in cryptocurrencies and make a profit, and if that profit exceeds 10 lakh rupees, you have to pay 30 percent of the profit. This is for short-term gains where there is no minimum time period for holding the investment. For a long-term gain, where your investment needs to hold for at least two years, you will be taxed 20 percent on the profit.
Myth #3 Cryptos are badly impacting the environment
Myths About Cryptocurrencies in [year]: Calculating the carbon footprint of cryptocurrency is more complicated. Although fossil fuels are the predominant energy source in most countries where cryptocurrency is mined, miners must seek out the most inexpensive energy sources to remain profitable.
Digiconomist estimates that the Bitcoin network is responsible for about 73 million tons of carbon dioxide per year—equal to the amounts generated by Turkmenistan.
Based on data through September 2022, Ethereum produced an estimated 35.4 million tons of carbon dioxide emissions before dropping to 0.01 million tons following its transition to proof of work.
Myth #4 Cryptocurrency Doesn’t Have Any Real Money Value To Them
Myths About Cryptocurrencies in [year]: Cryptocurrencies such as bitcoin and Ethereum were designed as a way to make payments without relying on traditional modes such as currency notes, debit cards, credit cards, or checks. The bitcoin white paper, which set off the cryptocurrency revolution, envisions an electronic payment system that allows “any two willing parties to transact directly with each other without the need for a trusted third party,” cutting governments and banks out of the financial loop.
The website Pymnts claims, “Blockchain IS the future of the payments industry,” a reference to the computational technology that undergirds cryptocurrencies. This is perhaps the biggest myth about cryptocurrencies since there is no material asset that is backing them. However, the people who trade in cryptocurrencies believe in their inherent value of it, which has been supporting the system since 2008.
Myth #5 Cryptos are only for seasoned investors
Myths About Cryptocurrencies in [year]: This is entirely false. One of the main goals of developing the idea of a decentralized currency is to give ordinary people more power and democratize the financial system by getting rid of intermediaries like government agencies and financial organizations. Although from a technical standpoint, understanding blockchain and cryptocurrencies can be challenging, the core idea is relatively straightforward.
With a wide range of services, including cryptocurrency exchanges, brokers, and peer-to-peer networks, enabling simple trading and acquiring of digital currencies, cryptocurrencies have recently become more widespread than ever. Unlike stocks and bonds, crypto doesn’t derive its value from an underlying entity. As it’s considered to be a highly volatile asset that is subject to erratic price fluctuations, financial experts typically advise against investing more than you’re willing to potentially lose.
Myth #6 Cryptocurrencies And Their Transactions Are Untraceable & Anonymous
Myths About Cryptocurrencies in [year]: A public ledger called the blockchain keeps a record of everything. Although there is some anonymity, it is still possible to identify users and their information in some circumstances. So there is user anonymity, but it’s not entirely assured, just like on other platforms.
Although it is possible to create a certain form of anonymity with cryptocurrencies, it is difficult to send transactions completely anonymously via the Bitcoin blockchain. Blockchains remain fully open and accessible to everyone. Thanks to the transparency of the blockchain, it is possible to easily track money flows.
The blockchain, a public ledger maintains a record of everything. There exists anonymity, but in extreme cases, identifying users and their details is not a difficult task. As bizarre as it may sound, crypto transactions can actually be traced! Cryptocurrency transactions are recorded on a blockchain, which is generally public. However, crypto trades are not necessarily linked to an identity, which provides a bit of anonymity for users.
Myth #7 Crypto trading is prone to hacks and scams
Myths About Cryptocurrencies in [year]: Employing a platform to trade in crypto is similar to using any other trading platform. The only method to protect your wallet and enable secure transactions is to increase the security of wallets that facilitate bitcoin trading. Using a platform to trade in cryptocurrencies is just like any other platform for trading.
Upping the security on wallets where trading in cryptocurrency is facilitated is the only way to secure your wallet and enable safe transactions. Crypto phishing scams often target information relating to online wallets. Scammers target crypto wallet private keys, which are required to access funds within the wallet.
Their method of working is similar to other phishing attempts and related to the fake websites described above. They send an email to lure recipients to a specially created website asking them to enter private key information. Once the hackers have acquired this information, they steal the cryptocurrency in those wallets.
Myth #8 Cryptos is a bubble that’ll burst soon
Myths About Cryptocurrencies in [year]: Another prevalent misconception is that cryptocurrencies are just the latest fad or gimmick, which will pass. Because there will always be people in this world who desire a lot of control over their money and a mechanism to send money around the world quickly and cheaply, it seems unlikely that Bitcoin and other digital currencies will go away.
The best thing about cryptocurrencies is that anyone may utilize them both short-term and long-term because they are self-contained and do not hang on governments or the Federal Reserve to operate. A cryptocurrency bubble is a phenomenon where the market increasingly considers the going price of cryptocurrency assets to be inflated against their hypothetical value. The history of cryptocurrency has been marked by several speculative bubbles.
Myth#9 Cryptocurrencies Are Not Accepted As a Form of Payment
Myths About Cryptocurrencies in [year]: Cryptocurrencies came in 2008. Slowly and steadily, their virtue has been realized by people who are investing in it. Big companies like Microsoft, Fiverr, Dell, and Expedia have started to accept Bitcoin. However, while buying cryptocurrencies is not illegal, cryptocurrencies are not recognized as legal tender in India. This means, that it is not allowed as a payment option in India.
Here’s why Bitcoin may not be a suitable option for payments in India. Fiat currencies have intrinsic value because their supply is controlled and backed by valuable reserves and a sovereign or central bank guarantee. Cryptocurrencies, barring a few stable ones, are not backed by any reserve or sovereign guarantees.
Myth #10 They Are Illegal Forms of Digital Money
Myths About Cryptocurrencies in [year]: Although the currency has been banned in countries like Bolivia, Russia, Algeria, Ecuador, and Trinidad; EU nations, G7 nations, and the USA have made cryptocurrency a legal tender. India’s previous Finance Minister, Mr. Arun Jaitley pointed out in the Budget 2018-19 that Blockchain technology will be explored to promote digital and safe transactions. The transactions in cryptocurrency are not banned in India and are thriving.
CRYPTOCURRENCY has been a hot topic of discussion in our country for quite a few years. Those who support cryptocurrency argue that the transactions of this virtual currency are done through blockchain technology and are therefore well protected. They say that it is very easy to invest; one can start investing even with Rs 100 and is a safe investment.
The first decentralized cryptocurrency was created by pseudonymous developer Satoshi Nakamoto in 2009. There is about 1.5 crore to 2 crore cryptocurrency investors in India, with total holdings of about Rs 40,000 crore, as per the industry estimates. But the actual figure of investing population in cryptocurrency and the actual holdings in our country are not authentically known to anyone.
Frequently Asked Questions (FAQs)
What influences crypto the most?
The combination of supply, demand, production costs, competition, regulatory developments, and the media coverage that follows influences investor outlook, which is one of the most significant factors affecting cryptocurrency prices.
What is the most unstable cryptocurrency?
While Fight Out is currently stable during its presale, the amount of utility offered by the project will likely cause it to explode following its release, making it perhaps the most unstable crypto. Dogecoin is another of the most unstable cryptos to invest in 2023.
What drives the demand for crypto?
When crypto is used as a form of payment on the web, any fees are paid by the sender of funds. The more people want to use crypto as a form of payment, the higher its demand will be. This makes it harder to create new coins, since they must be mined at a faster rate to accommodate increased demand.
What time is crypto most volatile?
Cryptocurrencies are most commonly traded between 8 am to 4 pm in local time. While the crypto market is 24/7, your trades are more likely to be executed when there is the highest level of activity.
What is the purpose of cryptocurrency?
A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms. The use of encryption technologies means that cryptocurrencies function both as a currency and as a virtual accounting system.
Which crypto is best for the short term?
Ripple (XRP) – Best Cryptocurrency to Trade for a Potential Rebound. Although considered one of the best long-term crypto investments, XRP is also an excellent option for traders with a short-term investment horizon.
Which crypto will survive?
Bitcoin and Ethereum will survive the crypto winter and thrive in the future, but if you are a risk-tolerant crypto investor looking for a name that’s a bit out of the left field and higher on the risk spectrum, Fantom would be a good bet to be one of the survivors of the crypto winter because of its long-term perspective
Why does crypto go down on weekends?
When crypto is used as a form of payment on the web, any fees are paid by the sender of funds. The more people want to use crypto as a form of payment, the higher its demand will be. This makes it harder to create new coins since they must be mined at a faster rate to accommodate increased demand.