Cryptocurrencies have long been a hot topic among online financial circles for obvious reasons. The explosive runaway growth they have shown have not been matched by anything else. This has led many to question if this boom can be sustained. As a result, there are a number of popular myths about cryptocoin which are frequently heard. Today, we are going to look at the four most popular myths about cryptocurrencies.
1. Cryptocurrency Makes Money Out of Thin Air
This is often a claim made to assert that the cryptocurrency boom is little more than a financial bubble. In fact, the opposite is true. Cryptocurrencies can in many ways be considered as stock market shares. While there are different kinds of cryptocoin, the basic purpose they serve is to generate value. A new startup that does not want to go the traditional IPO route to raise money can use cryptocurrencies. Since the market is unmediated for the most part, companies and crypto buyers do not need to pay extra money. In fact, cryptocurrencies put issuing companies and their buyers in direct contact with each other.
2. Cryptocurrencies are Practically Useless
It is a commonly held notion that cryptocurrencies have no direct value. While it is true that cryptocurrencies mostly need to be changed to fiat money, this trend is changing. Unlike physical money, cryptocurrencies can be potentially divided infinitely. This makes them easier modes of payment particularly considering that all transactions are made online. Thus, there is no real risk of theft or extortion and the users can send the exact amount they want. Further, since cryptocurrencies are internationally accepted, they do away with the tedium of changing one type of currencies into another.
3. Cryptocurrencies Can Never Integrate into Mainstream Finance
Many people think because cryptocurrencies are highly technical and lack of government regulation, they can integrate into mainstream finance. However, the rise of FinTech is already challenging this presumption in a big way. Industry leaders are emerging all over the world and the growing investment in cryptocurrencies has made regulatory measures imminent. Further, blockchain is being considered for adoption in a number of non-cryptocurrency fields. This swiftly rising interest in blockchain and cryptocurrency essentially ensures that cryptocurrency is on the verge of mainstream acceptance.
4. Cryptocurrency Cannot Be Properly Regulated Because of Anonymity
While it is true that cryptocurrency affords a degree of anonymity to users, it is not a completely anonymous channel. There are very few cryptocurrencies that actually ensure total anonymity. Major cryptocoin names like Bitcoin, Ethereum, Litecoin, and others offer a pseudonymous transaction model. So, it is difficult but not impossible to find out which wallet address belongs to which person. So, in the near future, as cryptocurrencies will be integrated into financial systems, anonymity will play a big role. There is no doubt that a well-defined, yet flexible regulatory model must be adopted. Countries like Japan and China are already experimenting with different regulatory models. Meanwhile, the EU is also looking to implement a formal cryptocurrency model.
Conclusion
The myths we have debunked above are only a few of the many surrounding cryptocoin. If you plan to invest in this exciting and rewarding market then you should resolve your doubts before you enter. Like any other financial trading platform, cryptocurrency offers many benefits at the cost of some drawbacks. Discovering the truth behind cryptocoin myths is the best place for you to start making a solid foundation in cryptocurrency understanding.
No doubt as this market is integrated into mainstream finance and FinTech as a whole, many new developments will emerge. Those who have a clear and well-structured understanding of cryptocoin options, the market, and the technologies driving them stand to benefit greatly.
