Cryptocurrency is still widely misunderstood, giving rise to a lot of myths being circulated around it.
As with any new area of investment, cryptocurrencies have prompted potential investors and analysts to ask many questions. Over the years, digital currencies have experienced significant boosts in popularity; regardless, there are still untruths, myths, and rumors about it.
We will take a look at some of these myths and shed light on the facts on what is; and what is not.
Here are some popular myths about Cryptocurrency:
Cryptocurrency is insecure
With the rise of Cryptocurrencies, there have also been a number of thefts and in some cases, digital currency users themselves have been the victims and in other cases, the criminals capitalized on vulnerabilities in wallets and other aspects of the cryptocurrency space. It is important to know that it is a possibility for fraud to occur, but there are several ways that users can protect their assets.
It is also important to note that many governments and other financial institutions have shown an interest in blockchain technology; one of the reasons for this is that blockchain is widely seen as a secure and effective tool with untapped potential.
Also the strong encryption techniques used throughout the blockchain and transaction processes are a safeguard against fraud and account tampering.
Cryptocurrency is a scam
It is understandable that most users are cautious when it comes to potential scams, but then, savvy users tend to treat cryptocurrency investments in the same way they would any other investments: with caution and a good amount of research.
It is possible for crypto users to be drawn into fraudulent activities in the cryptocurrency world, and this can happen when a user has not taken time to thoroughly consider and learn about the details of the opportunity itself. Just like in the traditional financial world, users are encouraged to take out time and effort to sort out dubious activities in the cryptocurrency space.
While it’s impossible to fully eliminate scams and fraud, this helps reduce the chances of being a victim.
Cryptocurrency is a ponzi scheme
Cryptocurrency has been called a Ponzi scheme a lot of times but then the digital currency system does not meet most of the criteria for a Ponzi scheme.
Crypto relies on the network effect, which means that sufficiently large numbers of people need to see it as a good holding for it to retain its value. But a network effect is not a Ponzi scheme in and of itself. Prospective investors can analyze the metrics of cryptocurrency network effect, and determine for themselves the risk/reward of buying into it.
In conclusion, every form of investment involves risks. And to be a good investor, you must learn to be cautious and calculative with a good knowledge of the investment market.