Cryptocurrencies represent one of the hottest topics in tech right now, so it’s understandable that there would be a lot of information surrounding this burgeoning technology. With so much hype going on, it can be difficult to tell which broad statements being made about cryptocurrency are true, and which ones are simply exaggerations or downright lies. It’s also easy to develop certain misconceptions about cryptocurrencies independently, just by making uninformed assumptions on your own. To help you separate the fact from the fiction, here are the top 5 cryptocurrency myths debunked:
1. It’s an Intangible Asset
It’s easy to fall for the idea that cryptocurrencies are just these invisible and intangible digits in an account, because that seems true on the surface. However, when you consider the fact that the monetary value of cryptocurrencies can be tracked (you can track prices here), and then you realize that you can spend cryptocurrencies on many major websites, it becomes clear that this currency can be quickly liquidated and converted into all sorts of intangible assets.
2. You Need to Buy Cryptocurrencies to Profit from the Industry
Most people think you need to actually own some cryptocurrency in order to make money off this new technology. That’s completely false because investors can also capitalize on the volatility and fluctuations that take place in exchange markets. This can be done by trading on the price movements rather than actually buying and selling cryptocurrency.
3. Blockchain and Bitcoin are the Same Thing
Wrong again, blockchain is actually the kind of encryption that Bitcoin and numerous other cryptocurrencies are built around. Essentially, blockchain is just a way of verifying the integrity and accuracy of account balances, funds transfers, and other crucial details through a shared public ledger. It’s designed to keep the system free from corruption and hacking exploits because everything can be reviewed from another machine due to the universal cloud backup approach that is taken.
4. All Cryptocurrencies are the Same
While all cryptocurrencies follow the same general path of being an encrypted digital currency as the name implies, they are often designed for entirely different purposes. For example, while Bitcoin is set up to operate just like a normal digital currency, Ripple is designed to facilitate international transactions and money transfers. Then there’s BAT, which is supposed to be used to fund online advertising campaigns. The fact that each cryptocurrency has its own special use or features means that you should do your research and due diligence before choosing one to invest in.
5. Cryptocurrencies Aren’t Safe
Cryptocurrencies actually use some of the most effective encryption and file integrity technology in existence. As such, one could argue that they’re just as safe, if not safer than, traditional forms of online banking. While there have been cases of people having cryptocurrency stolen from their accounts by hackers and nefarious parties, the rate of such incidents happening is much lower than the rate of conventional bank fraud.
Can Cryptocurrencies Make You Rich?
The old saying “history repeats itself” may just apply when it comes to cryptocurrency, and if that’s the case, then the answer is a resounding “yes, you could become very wealthy by investing cryptocurrency.” What precedence is there for making such a bold claim? Well, if you invested just $27 into Bitcoin in 2009 and then sold it in 2014, it would be worth $980,000. That type of return is only possible because cryptocurrencies are designed to increase in value as they become more popular. This creates a situation in which buying a new cryptocurrency early is a legitimate way to roll the dice and potentially create a fortune in the process.