The truth about cryptocurrencies isn’t nearly as exciting as all the myths surrounding them. While there are undoubtedly opportunities to make money, the cryptocurrency world isn’t what it’s cracked up to be. There are no crypto magic tricks to get rich overnight, and you definitely shouldn’t invest more than you can afford to lose. This article takes an objective look at what’s real and what’s not in the world of cryptocurrency, to help clarify some of the most common crypto myths.
#1 Cryptocurrencies Can Just Extinguish
The fact is, cryptocurrencies are entirely under the user’s control. Even they can lose value, they are not going to disappear and some crypto coins are even getting stronger by the minute. A wide number of companies use crypto as a currency, and some have given Bitcoin the legal tender status. Crypto markets are volatile, though. The price can go up or down very quickly, so it is very important to get to know the market before investing. The truth is that decentralized cryptocurrency creators have nothing to gain from causing their currency to fail, because they hold no control over them (for example, they can’t modify transaction records or change how currency units are created).
#2 Crypto is Illegal
While Bitcoin, the world's first cryptocurrency, was created in 2008, it didn’t really take off until around 2014. Nowadays, many governments are still figuring out how to treat cryptocurrency. It is currently legal tender in most countries, including most of Europe and North America. So, even though a few countries have banned cryptocurrencies outright, including Bolivia and China, crypto is accepted and declared a legal tender in most of the world.
#3 No Country has made Crypto the Legal Tender Status
While some countries such as Canada and the United States have a crypto-friendly attitude, only one country has yet taken that ultimate step and made cryptocurrency a legal tender status, El Salvador. President Nayib Bukele passed a proposal to adopt Bitcoin as a formal payment and, in June 2021, Congress approved it.
#4 All Cryptocurrencies are Decentralized
While most cryptocurrencies operate in a communal network with no part having more power than the next, some cryptos like XRP are produced by a single institution which makes them centralized. There are a few popular cryptocurrencies, like Bitcoin, that have been determined to be centralized. In order for a cryptocurrency to be decentralized, it needs to have no third party involvement in managing its blockchain. If a third party is involved in managing or operating a blockchain, then it is not considered decentralized.
#5 Crypto will Replace Fiat Currency
One of crypto’s biggest selling points is that it provides a secure and anonymous payment method that allows you to transfer funds across borders without worrying about having a bank account or paying high fees. Although several government-issued currencies are close to becoming digital fiat currencies, they have never achieved full adoption for various reasons. This means it’s unlikely that cryptocurrencies will ever replace fiat currency. Fiat currencies are better established for day-to-day transactions, while crypto encounters different scalability problems when it comes to buying groceries or paying for popcorn at a movie theater.