3 Common Myths You Should Steer Away From!

By abdulla | Education

May 09
  1. Digital Currencies Are Only Used for Illegal Purposes

One of the oldest and most pervasive misconceptions about digital currencies is that they are mostly used for illegal purposes. While it is true that digital currencies have been used by individuals with malicious intentions as well as criminal organizations, the same could be said of any form of money used throughout history.

According to Chainalysis, a company that uses blockchain data analysis to assist investigators in cryptocurrency crimes, the number of cryptocurrency transactions related to illicit activities fell to 0.34 percent of all cryptocurrency transactions in 2020 (the most recent report). 54 percent of the transactions in this small number were cryptocurrency scams.

It is important to note that governments and the international community are cracking down on criminals and organized crime's use of cryptocurrency. Many countries have implemented cryptocurrency anti-money laundering and counter-terrorism financing measures; agencies and teams have been formed to combat the use of cryptocurrencies in these illegal activities. 

  1. Cryptocurrencies Don't Have Any Worth

Value is a subjective concept—one person, community, or society may place monetary value on an object that another throws away. For example, the first cryptocurrency, Bitcoin, was valued in thousandths of a cent shortly after its launch in 2009. Its popularity grew further, and by 2021, it had reached $69,000 per Bitcoin. Its rise in value demonstrates that how a society perceives an asset is critical in determining whether it has value. 

Ethereum, the blockchain ecosystem that underpins the cryptocurrency ether (ETH), serves as the foundation for non-fungible tokens, decentralised finance applications, and other technological advancements in digital asset ownership. Although ETH does not have the same monetary value as Bitcoin, its utility and potential make it far more valuable to a company developing financial products and services based on the Ethereum blockchain and smart contracts.

Investors and businesses have begun to hold cryptocurrencies for use in finance, investment, venture capital, and a variety of other areas. Galaxy Digital Holdings, for example, is a financial services and investment firm that manages nearly $2.9 billion in crypto (digital) assets.

  1. Cryptocurrencies Are a Ponzi Scheme

Many retailers and merchants now accept cryptocurrency as a form of payment. People are using them in personal transactions, and governments are attempting to regulate them. Most digital currencies do not have any programming, code, or malicious artificial intent to steal your money.

However, people have devised schemes to defraud you of your cryptocurrency or money. For example, many initial coin offerings (ICOs)—unregulated fundraising for new cryptocurrency ventures—have proven to be scams. Other cryptocurrency scams may attempt to convince you to accept unverified transactions or call you pretending to be government officials and ask you to pay your debts in cryptocurrency.

While it is impossible to completely eliminate the possibility of becoming a victim of a scam, knowledge and awareness can help you reduce your chances of becoming a victim.

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