Investing and trading cryptocurrencies on platforms such as Bitlevex is a risky, but profitable venture.
With that said, many falsehoods about cryptocurrencies have been spread over the years. And even after a decade since their release, people still have a profound mistrust of crypto.
In this article, we will debunk some of the most notorious myths on cryptocurrencies and lay out some facts that should help you gain trust in these appreciating assets.
Bitcoin is a bubble
FALSE – Everyone that has heard of Bitcoin has at least encountered this phrase in their lifetime. Sometimes, even so-called financial experts have proclaimed that “Bitcoin’s bubble has burst”. I can’t even count the times I’ve heard the phrase “Bitcoin is dead” over the last decade.
However, the truth is quite different. Bitcoin actually enters bullish and bearish cycles, approximately every 4 years.
Bull markets usually follow Bitcoin’s reward halving closely. During these, we can see the price of Bitcoin increase dramatically. Take for instance the current bull run. Since the COVID19 crash, Bitcoin’s value has increased by 1500%.
However, they are also followed by a considerable retracement or a bear market. For instance, in 2017, Bitcoin reached $20.000 only to fall back to $3000 (-82% from peak to bottom).
Bitcoin is anonymous
FALSE – Many believe that because Bitcoin doesn’t require your name and address, those transactions are completely untraceable. This couldn’t be further from the truth. While bitcoin’s network is pseudonymous, all transactions are permanently recorded on the blockchain and remain accessible to anyone.
As such, government agencies can still backtrack transactions to their owners.
A solution to this transparency are privacy-focused cryptocurrencies, which hide the addresses and the amount of the transaction.
Cryptocurrencies can be falsified
FALSE – Unlike traditional money, cryptocurrencies do not have a physical representation in the real world. As a matter of fact, they are only records of transactions on their native blockchain.
The blockchain records their creation and the address they are stored on. As such, there’s nothing to duplicate or falsify. Each Bitcoin is unique and cannot be mistaken for another one.
Hackers can try to double-spend cryptocurrencies, but due to the distributed ledger technology, any attempt is instantly detected and prevented.
Governments can ban cryptocurrencies
FALSE – This myth comes up regularly, as we see bombastic titles such as “Turkey bans cryptocurrencies” pop out in the news ever so often. However, the reality is quite different.
You see, no government can actually ban cryptocurrencies, as they have no power over their network. The blockchain technology upon which they are based is completely decentralized, and central banks or governments cannot control it.
Additionally, the asymmetric cryptography that protects cryptocurrencies provides total ownership to the individual that has access to their private key. Without this private key, governments can’t access your coins nor can they confiscate them.
On the other hand, governments can ban companies and banks from dealing with cryptocurrencies and make their usage illegal.
Cryptocurrencies are facilitators for criminal activity
FALSE – Even governments fall for this one, and often state this fabrication as a reason for their distrust in cryptocurrencies.
While this might have been true a decade earlier, this trend has all but vanished today. The latest findings show that less than 1% of cryptocurrency transactions are used for illicit activities.
Actually, laundering money with Bitcoin is quite risky, which is why 99.9% of these criminal activities are conducted through traditional FIAT currencies.
Even after a decade, we still encounter banalities such as “Bitcoin is a Ponzi scheme” or “Crypto is a scam”. However, the truth is that cryptocurrencies have become a safe asset and are here to stay. Through mass adoption, they will allow us to build a more efficient and impartial financial ecosystem.