We have heard for some time now about the so-called “digital coins” or “cryptocurrencies,” and of all the technology that surrounds them, vaguely summarized on what they call “digital mining,” but some of the myths that have been created around this economic evolution, which is becoming more and more present in the globalized economy, have not been cleared up. Therefore, we are going to review some myths that have been established about cryptocurrencies, and the realities which refute these incorrect concepts.
Myth 1: They are unsafe because they have no regulations.
Nothing could be further from the truth. More than 20 countries have established a legal framework for handling cryptocurrencies, including the creation of their own digital currencies, as is the case of Venezuela and its “Petro” cryptocurrency; they have even encouraged trade through these means of payment, facilitating customs or tax procedures for those commercial agents that use them.
Myth 2: They are only used by bankers or tech experts.
Not necessarily, because operations in the cryptocurrency market are developed on very intuitive platforms, which are not associated with traditional “stock exchanges” and which, as they have evolved, have become accessible to anyone interested in investing, for which the platforms themselves provide the tools to learn about and adapt to the cryptocurrency market.
Myth 3: Their true value is not known.
As mentioned, cryptocurrency trading platforms report “in real time” about the price of each of the approximately 4,000 existing digital species, whose fluctuation is given by the law of supply and demand, as in any good or commodity traded on the stock exchanges.
Myth 4: They remind us of pyramid schemes, so they are fraudulent.
Nothing could be further from the truth, since, as already mentioned, their commercialization is direct, with the platform or application used essentially serving as a secure funds transfer protocol; in some isolated cases, they have been used for money laundering, but the same protocol that controls the operations has served to identify and control these particular cases.
Myth 5: They can be easily faked.
Due to the process with which cryptocurrencies are created, by means of the so-called “Blockchains,” they are virtually impossible to counterfeit. At the same time, the applications on which the transactions are developed guarantee the veracity, transparency, and execution of these.
Myth 6: The cryptocurrency market is volatile and can lead to bankruptcy.
Like any stock market, subject to the law of supply and demand, the corresponding cryptocurrencies may suffer fluctuations, but on the contrary to other types of commercial property, such as business shares, cryptocurrencies have a solid digital support; everything will depend on the investment and the reward sought, which implies a large profit or a terrible loss.
Myth 7: Personal information can be exposed.
On the contrary, due to the characteristics of the transaction process that takes place in the applications and platforms, the personal information of those involved in the operations is kept secure, which guarantees the transparency of these operations. The world will only know if you have acquired any cryptocurrency if you make it public.
Myth 8: You can only get cryptocurrencies by mining them.
As already explained above, the ideal way to get into the business of cryptocurrency is through trading platforms, in which transactions can be made for any of the digital existing currencies. The “mining” process, which involves the use of very specific hardware and software and which at the beginning of the emergence of cryptocurrencies was the easiest way to obtain them, has been falling into disuse in favor of the operations on the platforms, which can be made for relatively low amounts.
Myth 9: To get into the cryptocurrency business I need to make a very high investment.
As just mentioned, cryptocurrency transaction applications allow starting with relatively low amounts, also taking into account the price of digital currencies, since Bitcoin is around $16,800/unit, while Binance is at $1.0010/unit or Tezos is at $1.01405/unit, to mention only three; according to the portal “investing.com” as of November 15, 2022. It will depend on the trader’s agility, the “eagle eye” or the monitoring of the market to maximize profit and avoid losses.
Myth 10: “Blockchain” and “Cryptocurrency” are the same thing.
Not necessarily, since cryptocurrencies are supported by the technology of “blockchain” to guarantee operations, veracity and security, but this technology is also used in other digital goods, such as so-called NFTs (an acronym for “Non-Fungible Token” or “Non-fungible Voucher,” a type of digital asset encrypted or even the digital certification of a physical part).
Myth 11: Every cryptocurrency is Bitcoin.
While Bitcoin is the best-known cryptocurrency and is even used as a synonym or reference, it is not the only one that exists, though it does take the honor of being the first cryptocurrency established in history; as previously indicated, there are about 4000 cryptocurrencies in the market, although some sources such as the European School of Management and Enterprise (EUDE) place that figure at around 18000.
Myth 12: They can’t be used like traditional cash.
Through e-commerce, it is possible to make transactions involving payment in cryptocurrencies, and even in many countries there are ATMs that allow exchanging them for local currency or for “hard currency” such as dollars or euros, so the use of cryptocurrencies as a means of payment is established (although it is necessary to recognize that on a low scale).
Knowing the reality of cryptocurrencies, from these twelve myths mentioned and clarified, and using the tools provided by the best-known platforms and applications, it is possible to make operations with total confidence, seeking an interesting return on the investment made, without fear of fraud, losses, or failures in the development of operations.