This post contains affiliate links. As an Amazon Associate I earn from qualifying purchases.
What are the top five myths about crypto? There are plenty of myths, rumors, scandals, and dreams about cryptocurrencies. Some are so bad that people who don’t know much about them scream out caustic excuses for avoiding the digital coins.
Here are the top five myths we’ve all heard and hear constantly. Let’s get to the ready rebuttals of the initiated.
Myth One = It’s A Ponzi Scam!
Cryptocurrency is not a Ponzi scam (pyramid scheme) or an MLM (multi-level-marketing). This would require an obligation on your part to pay whoever recruited you. Also, whenever you recruited someone, they’d have to pay you.
For the most part, you are never recruited to become a crypto investor. You make that decision with guidance, but if someone demands money to help you, that person is running a separate business.
Go to any exchange platform you like – making sure it’s credible – and buy the cryptocurrency of your choice for nothing more than the cost of the currency and a small fee. The money kept by the platform is not trickled up to an all-high pinnacle of wealth.
Developers of cryptocurrencies may or may not become wealthy as a result of the coin’s creation. People who mine the coins may sell them for the value of the coin and charge a tiny miner’s fee. They don’t give any of this to the developer.
The developers mine their own and can sell or trade it as they wish. Furthermore, the developers never decide the value of the coin. Neither do the miners. A coin’s value is determined by the market.
Myth Two = The Government Is Going To Outlaw It
Some governments have outlawed it for their own reasons. Other governments are trying to make their own cryptocurrencies. Most governments, like those in Europe and the USA, no better than to try and outlaw something so accepted worldwide.
Instead of outlawing cryptocurrency, these governments are using their own methods of control over the largely decentralized assets. Count on confusing tax laws to do most of the work.
Governments don’t like any currency they can’t tax, so the once somewhat invisible transactions of digital currencies are now carefully scrutinized. That weed you were planning on buying from the dark web is now going to have the government wanting to know where that crypto went.
Myth Three = It’s Just Used For Illegal Activities
Like any currency and valued asset, crypto can be used for both good and evil. The myth that crypto is only good for illegal activities comes from the fact that digital currencies, such as Bitcoin, were easier to spend online.
The dark web, which is also used for good and evil, tends to keep many secrets, which makes the idea of untraceable payment methods quite attractive. Did you really think this started with Bitcoin?
Did terrorists suddenly become successful with online currency? No. People looking to spend and sell for nefarious purposes have always been able to use fiat currency, as well as other luxurious items such as gems and metals.
Digital currency is less useful for law-breaking than fiat money and rubies. Why? Because criminals are just like law-abiding citizens in that they want what they feel holds value. Gold and dollars that you can handle will always be worth more than something as volatile as crypto.
Myth Four = It’s Too Easy For Hackers To Steal Or Destroy
Hackers have destroyed many things: bank accounts, reputations, identities, businesses, marriages, records, etc. Why not crypto?
Cryptocurrency, like any other asset, is as secure as you decide to keep it. You can keep it in a paper wallet and show it to friends around a campfire. You can keep it in a hardware wallet and flail it around while riding a roller coaster. Or you can have millions in an online wallet of dubious security.
As far as the crypto world in general, hackers could unravel it with the same ease that it would require to disempower a major government. This is because crypto is worldwide and stored in millions of computers and databases, including some that aren’t even online.
The average black hat hacker has more realistic and exciting options than trying to take down thousands of online currencies. Oh, just worried about Bitcoin? It’s all over the world, too.
The hackers who possess the skill and time to take down Bitcoin don’t exist. One would need to wait for the golden moment when all users and owners and miners had all their assets online. It can’t happen.
Sure, there are hackers who could stymie a major exchange platform, such as Coinbase, but that would be like taking down a bank. It would be a serious inconvenience for many people, but not an earth-shattering catastrophe.
Myth Five = It Isn’t Real And Has No Real Value
The idea that cryptocurrencies aren’t real stems from the fact that they are digital. You can’t hold a Bitcoin in your hand. Those pretty coins you see in memes are just representatives of the value-holding digital coins.
Digital things are made of bits and bytes. Remember learning this? Lines upon lines of ones and zeroes make all the online data on Earth. Cryptocurrencies are as real as all those digits.
Video games are digital and you can’t feel or hold them unless you have them on a disc. But, if you lose the disc the game still exists because it is readily retrievable from countless other online sources.
You know the game is real because you can play it. You can even play it with other people around the world. These games are made with complex programming codes.
People buy these games with fiat money because they’re fun to play. Once you have paid for the game you can resell it, exchange it, gift it, or just keep it forever in hopes that it will always be fun.
You know crypto is real because you can spend it. You can even buy things from other stores around the world. These coins are made with complex algorithms.
People buy cryptocurrencies with fiat money because they are investors and investing is fun. Once the crypto is theirs, they can sell it for fiat, exchange it for other cryptocurrencies, buy things like video games or other physical items, or just keep it forever.
Back to our example of video games – World of Warcraft is nearly priceless to some people. They’ll invest thousands of dollars into it because it is fun to play. It gives them pleasure, and people will pay a premium for pleasure.
World of Warcraft is worth nothing to me. I wouldn’t pay one cent for it. It isn’t fun for me and it offers no pleasure. Most gamers don’t care whether or not I like the game, because my opinion has no bearing. Theirs does.
Ten Bitcoins may have zero value to you. You can’t hold it, touch it, see it, or carry it into any store on Earth and have it valued by the seller. You won’t buy any BTC because, even though you know others would buy it from you, you don’t want the trouble of fooling with it.
Ten BTC, as of this writing, are worth more than $80,000 to me. As an investor, I can hang onto them in hopes the value will go up or I can cash them out and buy a few cars. There are more and more online stores that accept BTC. I enjoy it, so I am one of the many people who place a fiat value on it.
Bottom line = nothing has value until we, as living and thinking beings, give it value. It will be as valuable as the market decides it is. Many people want BTC. Bitcoins are rare in comparison to the people who want them; this drives the value up. Up it remains until the market wants nothing more to do with it.
It works the same way for precious metals and gems. Information and training come with prices. The more you want something the more value it has. If many people want it the value goes up.
Compare cryptocurrencies to water and gold. We all need water to survive, but water is plenteous; it is, therefore, inexpensive despite our heavy dependence on it. Gold is just a luxury. We don’t need it. Other metals can do what it does.
But gold is shiny and pretty, and many people want it. However, it is not common and easy to find. I can dig a hole in my backyard and eventually find water. If I dig a hole miles deep the chances are slim to none that I’ll find gold. If someone wants gold, they’ll have to pay a lot for it.
The official value of a cryptocurrency comes from its limited production, the amount of energy it takes to mine it, and the desire people have for it.
Few cryptocurrencies are meant to be produced indefinitely. Whether it’s by Proof of Work mining, Proof of Stake mining, or the initial limited release of a coin, it takes work to make it. Developers and miners and holders all want the coin to be worth something.
The coin is distributed in its ICO and promoted with excitement by users. Eventually, more people want it, so its value goes up. If no one shows interest, its value goes down.
What are your arguments? How do you answer these accusations? Let us know your thoughts in the comments below!