Although I’ve never actually bought or traded any myself, I’ve always been fascinated with cryptocurrencies. I’ve followed them for a number of years, including a post in 2013 I did. It’s still very much in popular culture, including on a past episode of the Big Bang Theory, where the guys realized that they had bought a couple of Bitcoin, long before it was actually profitable. They then stumbled to find a data file of an investment that was now worth hundreds of thousands of dollars. For many people, this will be the only info they know about the crypto market or that it’s some sort of currency that you trade digitally. Cryptocurrency is a very risky asset to hold, but often with more risk comes more potential for reward, as we saw bitcoin going as high as nearly $20,000 for 1, now down to $4,000. It’s certainly not for everybody. Before you get consider getting involved there are a few myths and misconceptions that you should be aware of.

Myth#1: Crypto Is Anonymous

Millennials tend to think everything they do online is anonymous when really there is no such thing as online anonymity. This is true if you are completing crypto transactions. Instead of being anonymous, Bitcoin uses a public ledger. This public ledger tracks how much was sent from one place to the next. Although it’s not identified by your name, various governments now have deals and contracts with cryptocurrency companies to make sure that they can gain information and addresses of traders. This means that cryptocurrencies are not an investment or tool of trade for criminals. At least not anymore and the majority of people trading are law abiding citizens simply looking for a securer and faster way to trade.

Myth #2: E-Wallets Can Be Recovered

Typically, you store your cryptocurrency in an e-wallets. At the end of the Big Bang cryptocurrency episode though the guys find that their investment has been lost and this is actually quite true in real life. If the computer with the e-wallet crashes or you lose the code to access the account, it’s essentially gone forever. You won’t be able to recover your investment as it’s similar to losing a Word document.

Myth #3: There’s No Taxes

Many people believe that there are no taxes to pay when you use cryptocurrency, however this is not technically the case. For example, you might be wondering about the taxes on bitcoin and whether they will apply to you. If you sell bitcoin at a profit and you purchased it within the last year, you are going to need to declare short term capital gains, and pay the regular amount of tax on this. It is your responsibility to correctly track, declare and pay the right amount due on cryptocurrencies, and if you don’t and the IRS finds out, you could be in for a lot of trouble.

Myth #4: Bitcoin Is The Only Way To Go

Last but not least, although it’s the most widely known, Bitcoin is not the only option available on the market. There are a variety of different possibilities that you can consider now. There are even options where you can get in on the action early and see fantastic appreciation further down the line. Note that some of these early/newer cyrptocurrencies haven’t gone very far at all, but it can be fund to watch and learn. Other common examples are Ethereum or Ripple. Bitcoin is actually an older cryptocurrency and newer ones will often be faster and charge less transaction fees.

There you have it, 4 cryptocurrency myths that we were able to bust!