Fact vs. Fiction: Debunking Some of The Top Cryptocurrency and Blockchain Myths

8 mins read
  • The fact that there will only ever be 21 million bitcoin reveals the fact that it is scarce, and this scarcity is a major turning point of its value.
  • With the help of encryption, linked blocking, and consensus mechanism, your cryptocurrency is secured and protected.
  • Many cryptocurrencies are now taking a stance to reduce the environmental footprint by shifting to Proof-of-Stake mechanism.
  • Cryptocurrency transactions are traceable because the blockchain is completely transparent and every transaction is publicly stored on a distributed ledger.

Cryptocurrency has been a topic of interest ever since it was first introduced in 2009. And as it grows in popularity, its influence has been leading to a mass adoption currently taking place worldwide. Today, there are thousands of cryptocurrencies available worth millions of dollars. 

While many have accepted the much-needed shift to digitality, for some, cryptocurrency still remains obscure. Whether it is the complicated nature of the expanding sector, or the uncertainty and risks involved behind it, cryptocurrency has given rise to a plethora of myths and we believe it is time to debunk some that top the charts. 

Myth: Cryptocurrencies Don’t Have an Underlying Value 

The best way to undermine this one is with a solid example. 

When Bitcoin was launched as the first-ever cryptocurrency in 2009, it was valued at thousandths of a cent. As the audience started to accept the concept of digital currencies, and Bitcoin started gaining popularity gradually over the years, in 2021, its value increased to a whopping $69,000 per Bitcoin. This demonstrates the role of society in perceiving whether an asset has value. 

Additionally, the fact that there will only ever be 21 million bitcoin reveals the fact that it is scarce, and this scarcity is a major turning point of its value. 

Currently, investors and enterprises have started using cryptocurrencies in sectors such as finance, investment, venture capital, and much more. For instance, a financial service and investment company named Galaxy Digital Holdings announced it holds approximately $2.0 billion in crypto (digital) assets under management as of July 2022.

Myth: Cryptocurrencies Aren’t Secure 

Probably one of the classic ones. Since there is no involvement of central banks in the issuance of cryptocurrencies, they are not recognized as legal tender. Hence, for some, cryptocurrencies are not safe and aren’t recognized as currency. This is also due to the fact that unlike fiat currency, we cannot physically hold a cryptocurrency making it seem unsafe with the fact that these are only stored in a crypto exchange or in your crypto wallet. 

As the name suggests, cryptocurrencies are backed by cryptographic methods to maintain security. With the help of encryption, linked blocking, and consensus mechanism, your cryptocurrency is secured and protected. Yes, we agree there are risks involved in relation to crypto access, which is why knowledge is important in order to offset this. 

For instance, your cryptocurrency can be highly protected if you choose to store it in a cold wallet, which is a storage method not connected to any network or the internet. This way, you can keep your cryptocurrencies safe from hackers or other vulnerabilities. 

On the other hand, even if you choose a hot wallet, which is internet-connected, you may only transfer what you need to spend at any given time using a secure connection. This will keep your crypto safe. 

In short, there are methods to secure your cryptocurrencies and investments.

Myth: Cryptocurrencies Negatively Impact the Environment

There’s been a lot of attention on some cryptocurrency’s appalling carbon footprint, hence the concern is real. This is particularly because many cryptocurrencies rely on Proof-of-Work system that takes a large number of calculations followed by a massive amount of computer processing power to mine a single token. 

Crypto mining remains an energy-intensive process that is also required to keep the entire system secure by making it expensive for hackers to attack.

However, an important point to be raised here is that many new and existing projects are now making a shift to the Proof-of-Stake mechanism that proves to be eco-friendly along with offering the same level of security

Blockchain technology is ever-evolving and many cryptocurrencies are now taking a stance to reduce the environmental footprint. Currently, 39% of bitcoin mining is now powered by renewable energy, which is hydro, wind and solar. 

According to statistics revealed by researchers for Cambridge University’s Bitcoin Electricity Consumption Index, “bitcoin’s environmental footprint currently remains marginal at best” while New York-based Ark Investment Management concludes that “bitcoin is much more efficient than traditional banking and gold mining on a global scale.”

Additionally, Ethereum aims to reduce its overall energy consumption by 99.95%.

Myth: Cryptocurrency Transactions Are Anonymous and Cannot Be Traced 

Cryptocurrency transactions can certainly be traced, especially nowadays when there are blockchain explorers involved. For instance, it is now easier to track a Bitcoin transaction as Bitcoin explorers allow you to map activity on Bitcoin blockchain. 

Other cryptocurrencies such as Ether also have their own blockchain explorers who can help you find information about transactions on the blockchain, such as what amount of crypto was sent to which address. 

Cryptocurrency transactions are traceable because the blockchain is completely transparent and every transaction is publicly stored on a distributed ledger for records. However, despite the transparency of the blockchain, people are able to make crypto transactions anonymously. 

To deal with this, more and more countries are implementing regulations on crypto transactions and are adhering to KYC rules that require you to reveal your identity on centralized trading platforms.

Conclusion

Cryptocurrency is not just a mere trend; it is the future. With its ever-evolving nature and new ways to make it more adaptable, blockchain technology and cryptocurrencies are here to stay and will not fade away. 

More and more industries and countries have now started accepting crypto as regular payment, demonstrating the fact that digital tokens are now being represented as money which indicates a digital shift into the future. 

We at LYOPAY empower people with digital currencies and make them feel at ease when it comes to crypto trading. Our ecosystem of crypto products was created so that people can get comfortable with cryptocurrency and start using it on a daily basis, hence contributing to the ongoing mass adoption of crypto.

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