Larger retailers around the world are now accepting cryptocurrency is a genuine tradeable currency. It is securely encrypted using cryptographic techniques, which serves as the medium of exchange to cryptocurrencies as a form of payment. Overall, only 16% of consumers familiar with cryptos have invested in them, showing that crypto’s stereotypes may be impacting its adoption potential. While savvy investors have already made a fortune trading cryptocurrency, the general consumers are still wary of accepting the use of cryptocurrency. But that should not be the case anymore.
Crypotcurrency spending myths
1. Cryptocurrencies aren't worth anyhing
Sceptical people question the value of cryptos and ridicule investors for backing unregulated currency, they are only speculative assets or are they? The reality is that cryptocurrencies are borderless, global currencies that fluctuate based on demand and supply. Cryptos are cashless, and that is the reason many supporters believe that they are the future of finance. Over 90% of the fiat money people hold, such as the pound, euro, or the dollar are already in digital format. Cryptocurrency like Bitcoin cannot be inflated away through quantitative easing like physical currencies. Since Bitcoin is a deflationary and scarce currency, it is a much better store of wealth than fiat currencies. The general trend around the world is a move towards cashless societies where cryptocurrency will greatly benefit.
2. Crypto is dirty money, used for illicit activities
Cryptos and in particular bitcoin are frequently viewed with caution due to alleged linked to criminal activities. Many people mistakenly believe that cryptocurrencies attract criminal activity because of its total anonymity; not true. Although users can be pseudo-anonymous, every transaction on the underlying blockchain is traceable. Yes, cryptos have been and will be used for illicit transactions, however, every transaction is visible and recorded through blockchain.
Absurd as it might seem in 2020 people still believe that cryptocurrencies are the preserve of weapons merchants, child abusers, drug dealers, and dark-web bad guys. Hopefully articles like this one and countless others will dispel this myth. The majority of cryptos are not entirely anonymous as they have a layer of transparency, which sets them apart from cash and physical commodities.
Money laundering and the drug trades have been around a very long time, Bitcoin hardly invented it. The assumption that cryptos make illegal activities easier than the british pound (GBP) is fundamentally wrong.
3. Cryptos are too volatile and just for speculators
There were times when the cryptocurrency has been volatile, particularly the dramatic increases seen in late 2017, and price jumps in either direction in 2018, 2019 and 2020, has led many people to dismiss them as nothing more than a speculative asset with no purpose or intrinsic value. Like all fiat currencies, cryptos are only worth what somebody is willing to pay for them. They are different from physical assets like a car, where despite the depreciation, a person still owns a car.
Just because a currency is not backed by a physical asset doesn’t mean that it is purely speculative in value. Although the british pound (GBP) has no intrinsic value, it is trusted worldwide. Cryptos are experiencing increased stability despite short-term fluctuations in their prices. Currently, Bitcoin products are more stable than many financial products. Cryptos have become essential alternatives used to simplify international payments and operate independently of government policy, whether they like it or not. They are known to offer a secure payment option for emerging markets with vulnerable currencies.
Also see: Tips To Trade The Volatile Crypto Market
4. Cryptos are unregulated
Crypto regulation across the world has significantly increased this year. In the UK the Financial Conduct Authority (FCA) took the reins over crypto currency regulation and anti-money laundering (AML). Europe’s Fifth Anti-Money Laundering Directive (5AMLD) came into effect on 10th January, while some countries like Australia, Japan, China, the US, and others were early movers and adopted proactive measures to regulate the crypto space. The Financial Action Task Force (FATF) has made real progress with a proposed series of actions, which have increased the urgency for nations across the globe to have robust anti-money laundering regulatory frameworks for cryptocurrency. Crypto businesses are required to comply with regulations for them to conduct their operations.
5. Cryptocurrencies are vulnerable to being hacked and can't be trusted
Blockchain is one of the more secure options for financial transactions, the technology behind the blockchain is complex and very secure (see: What is Blockchain?). Some markets are hacked because of poor stewardship, but blockchain remains secure throughout. Blockchain is a chain that means that when one block is changed, the subsequent blocks are also changed, therefore making it almost impossible to corrupt. However, this is different from a case whereby some cryptos are being targeted purely for money laundering purposes, which does happen and may affect the markets reputation. Crypto investors are continuously being advised to check where they invest their funds. If you are investing in brand new and very small cryptocurrency provider, be sure to checkout their credentials very carefully.
Also see: How can you spend Cryptocurrency?
Cryptocurrency purchases still have a way to go
Despite explaining these myths above, investing and spending cryptocurrency will remain a challenge for several reasons that hold most people back. Most consumers feel that cryptos are highly volatile, understanding real world values is too complicated, and the 'I'll stick to what I know' mentality. The cost associated with crypto adoption, which isn't cheap admittedly, lack of understanding, and fear are the main factors that hold people back. However, trust is vital for consumers, institutions and companies to work together and liaise with legislators to adopt the latest cybersecurity solutions on blockchain.
Hopefully this article will help to dispel some of the myths and show you that investing in cryptocurrency isn't just a gamble.
If you are new to the Cryptocurrency world and would like to open an account we recommend Cex.io.
Do you find this article useful? Comment below...