Cryptocurrencies have had their highs and lows. There have been instances of controversy and those of celebration for investors. Yet, the future of digital coins is uncertain. Uncertainties come with myths and misconceptions, and the crypto space has not been spared. It is hard to tell where misconceptions come from, but they are usually born out of fear. Everyone does not readily understand cryptocurrencies, which is why most rely on hearsay and myths to massage their fears.
The year 2022 has had scary moments for crypto investors. At some point, Bitcoin was down more than 37%, while Ethereum was down more than 41%. Coinbase also reported a shocking first quarter leaving many in panic. These events have gone a long way in enforcing the entrenched beliefs of cryptocurrency naysayers. According to a study, 40% of respondents say they avoid digital currency because they feel it is not regulated, while 60% claim they do not understand it.
Many myths have marred the crypto space, and this article will unpack the six most common ones.
1. It Is Too Late to Invest in Crypto
Many individuals are discouraged from joining the crypto world since they feel it is too late. On the contrary, investing in cryptocurrency can never be too late. As you might know, digital coins are highly volatile posing massive fluctuations in their valuations. If you are a new trader, the volatility will come with its advantages since there is always the possibility of upward swings.
If you have never traded before and want to start, it will serve you well to have a trading partner. One such companion is Bitcoin Union, a digital platform that assists you in making trades. It is made in a beginner-friendly way, ensuring easy navigation and little confusion. You can trade more and worry less with Finixio AI.
Digital Currencies are Insecure
Individuals who have been skeptical about cryptocurrencies have labeled them as insecure. Yet, you only need to take the necessary precautions, and your crypto transactions will be secure and safe.
Knowing the security risks you face when trading cryptocurrencies would be in your best interest. These include scammers and cybercriminals who are out to steal your investment. Ensure you thoroughly research any coin or platform before investing in them. Remember, avoid deals that sound too good to be true.
2. Cryptocurrency Transactions Are Anonymous
Anonymity is another myth surrounding the cryptocurrency trade. This can be from the interpretation of the word crypto, which comes from the Greek word ‘kryptós meaning hidden. Contrary to the belief, your crypto wallet address can be traced, meaning the trading is not as anonymous as you’d like to believe.
Crypto exchanges are recorded on a public blockchain that authorities can use to trace individuals and transactions. While crypto trading has been associated with hiding criminals, the claim is inaccurate. Since your pseudonym is public, you can say crypto trading is pseudonymous rather than anonymous.
3. Crypto is Not Regulated
At its onset, crypto trading felt like the Wild West. However, more governments have continually regulated digital currency as time has gone by. This is despite cryptocurrency being a decentralized system. Authorities are coming up with regulations to stamp out illegal activities.
Some countries have gone as far as banning cryptocurrencies. For instance, the Chinese authorities declared crypto transactions illegal in 2021. It was meant to prevent a capital fight and economic instability.
4. Digital Currencies Do Not Have Real World Value
Cryptocurrencies are digital currencies. Understandably, most people assume that they have no real-world value. However, cryptocurrencies have much value in the real world despite the inability to touch the currency physically.
Digital currencies are a great way to facilitate international payments. They cost less for both parties, and the transactions are fast. It is also an excellent investment since the currency’s value can increase, thus making profits. Many vendors are continuously accepting crypto as a method of payment. Despite the uncertain road, there is much to hope for when it comes to cryptocurrencies.
5. Cryptocurrency Gains are Not Taxed
Most people assume that gains from crypto trading are anonymous since they believe that transactions are anonymous. Just like the transactions not being unknown, the gains you get from crypto trading are taxed by the IRS.
The IRS views cryptocurrency as property. They charge you for the gains on just stocks and gold. You pay taxes on the gains when you trade or sell your holdings. The rates are affected by filing status, income, and the time you hold on to the assets.
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Every technological or financial development is met with controversy, skepticism, and misinformation. Digital currencies are no exception and have not escaped misinformation and myths. Many myths have been peddled since the onset of digital coins, and they have deterred potential investors from dipping their toes in crypto trading.
You need to understand how cryptocurrencies work so that you can separate the truth from the misconceptions. Ensure you do thorough background research on different currencies before you invest. Crypto trading is highly speculative, and you must tread carefully. Above all, invest what you can afford to lose.
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