In the past few years, cryptocurrency has gained a lot of attention, both when prices are rising and when prices are falling. Thousands of investors (including this blogger) see its potential and are willing to risk their money on it. However, there is also a lot of negativity surrounding this field. At first glance, it’s easy to dismiss cryptocurrency as nothing more than a fad set to crash and burn at any moment. After all, its market valuation has ballooned from around $20 billion to over $800 billion and now in some cases is down 50%. It’s not a stable investment opportunity, but it hasn’t stopped people from buying into it. Because of this negative attention, many people hesitate to invest in cryptocurrency or even learn more about it. However, just because something gets a lot of bad press doesn’t necessarily mean it isn’t worth your time and effort. Here are some myths about cryptocurrency that need to go away if you want to make an informed decision:

Criminals and hackers only use cryptocurrency

Cryptocurrency is a decentralized system that doesn’t rely on a bank or any other financial institution to process transactions. Instead, it uses complex algorithms to create new tokens and track cryptocurrency ownership. This system is open source, meaning anyone can examine the code and ensure it isn’t a scam. As a result, any criminal or hacker can use this system just as easily as anyone else. It isn’t just used by criminals and hackers, however. The open-source nature of cryptocurrency means that people can create plug-ins and add-ons for the system that suit their needs. Cryptocurrency has proven to be very beneficial for people living in areas with unstable governments or economies. It can transfer money quickly and easily between countries without relying on centralized financial institutions.

It isn’t regulated

Although governments or financial institutions don’t regulate cryptocurrency, it still has many regulations surrounding it. In most countries, it is considered a type of commodity rather than a type of currency. As a result, people who buy, trade, or invest in it must pay taxes on their earnings. Their investment is also subject to the fluctuations that come with the stock market. Cryptocurrency exchanges and trading systems such as bitcoin method are also heavily monitored by the government, and they must follow strict financial regulations to stay in business. Here in the US many crypto exchanges have KYC, or know your customer regulations, meaning you have to provide your ID or SSN to open an account. Governments may not regulate it, but it’s not unregulated. It’s one of the most heavily regulated forms of investment available today.

All transactions are anonymous

Although all transactions are recorded, the system doesn’t use personally identifying information. You don’t have to provide your name or other details when transferring or receiving cryptocurrency. The only information recorded is the public key used to send and receive cryptocurrency. This is an encrypted string of numbers and letters that don’t contain any sensitive or private information. While it’s true that cryptocurrency transactions are anonymous, that doesn’t mean that they’re entirely untraceable. Because all transactions are recorded, anyone can trace them back to their original owner. If someone is caught committing a crime with cryptocurrency, it is possible to trace the transaction back to them.

People invest in cryptocurrency to make money fast

Investing in cryptocurrency is a long-term game that requires patience and research. Most people who invest in cryptocurrency don’t do so to get rich quickly; they do it to diversify their portfolio and get in on a booming market. Some investors have indeed made a lot of money by investing in cryptocurrency, but it’s also true that many have lost a lot of money as well. Cryptocurrency is a risky investment that can go up or down depending on the market and news headlines. It’s a volatile market that can go up or down at any moment. If you’re going to invest, research and ensure you understand the potential risks. If you want to make money from cryptocurrency, you need to be willing to lose some money along the way. If you’re not ready to lose some money, you’re better off staying out of it altogether.

Summary

Cryptocurrencies are a risky investment and while some have made money off of it, many others (including yours truly) have lost money! My advice? Do your research, invest cautiously and don’t put more money into it than you can stomach losing!

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