Myth 1: Cryptocurrency is a bubble
Back in 2010, the price of Bitcoin was less than $1, and now it is valued at over $100,000. Other cryptocurrencies have also shown price increases of hundreds or thousands of times. This has led to comparisons of the crypto market to a bubble that will inevitably burst, leaving investors with nothing.
First, let's clarify what a bubble actually is. It is an economic cycle of trading an asset characterized by unstable growth in its market value. One of the first examples of such a bubble is the price increase of tulips in the Netherlands in the 17th century. Their price skyrocketed dozens of times, and after the crash, it never recovered. The dot-com bubble at the beginning of this century is also well-known. During that time, the value of internet companies soared and then collapsed sharply in a short period.
Bitcoin and other cryptocurrencies have existed for more than ten years. During this time, they have gone through several cycles of rising and falling value. However, after all previous declines, Bitcoin has set new price records. The entire crypto market has risen along with it.
As analysts explain, cryptocurrency fluctuations create a pattern typical of young markets. They expect that over time, assets will rise and fall with smaller fluctuations, and the time between these cycles will increase. This means the crypto market will become more stable and predictable.
Myth 2: Cryptocurrency has no real value
There is a belief that cryptocurrencies are essentially worthless and that trading them is trading air. Therefore, it is said that over time, not even $1 will be offered for Bitcoin.
When it comes to Bitcoin, its value is supported by several factors. This includes the ability to transfer funds to any part of the world, protection against counterfeiting, and fixed transfer fees. Additionally, unlike traditional money, which central banks can print in unlimited amounts, the number of Bitcoins is limited to 21 million. More cannot be created. That’s why Bitcoin is often compared to gold, which also cannot be printed at the order of a central bank.
Other cryptocurrencies also have practical benefits. For example, they provide smart contracts, privacy, lending, and use on gaming platforms, etc. Of course, there are many coins that have no practical use at all. Therefore, before buying a specific token, you should find out what it was created for.
Myth 3: Cryptocurrencies are a trend, and it will soon pass
Several decades ago, computers and email were of interest only to a very limited number of technology enthusiasts. When Steve Jobs said that soon computers would be in every home, he was surprised to be asked, 'What do we need them for?'.
The same is happening with cryptocurrencies now. They are still used by a relatively limited number of people. However, modern cryptocurrencies are creating ecosystems that, according to analysts, will continue to develop, and more practical applications will emerge for them.
Interest in decentralized financial programs is growing, which are safer, more reliable, and cheaper than current systems. Tech giants are exploring ways to merge the real and digital worlds, using blockchain technology as a building block for this. Governments are considering creating their own cryptocurrencies. Therefore, virtual assets will certainly evolve and change but will remain alongside the technologies on which they are based.
Myth 4: Buying cryptocurrency is difficult
Many potential investors are deterred from buying crypto assets due to a lack of experience. Since this is a new and technological tool, it may seem complex. In reality, you can invest through specialized exchanges, mobile apps, or other trading platforms. The registration procedure on them is usually no more complicated than creating an account on a social network or an online store.
Typically, large exchanges require identity verification. For this, you need to upload a photo of your documents. This is a requirement of global regulators that helps make exchanges safer. However, those who value anonymity can find platforms where such requirements do not exist.
The process of buying cryptocurrency is also simple. You can top up your account and then make purchases or pay for each crypto acquisition directly with your card. The complexity of this procedure can be compared to topping up a mobile phone or buying goods.
Therefore, today, anonymous platforms are gaining particular popularity. One such platform is the well-known exchange Cryptex. User data is not stored here, and only an email address is required for registration.
Myth 5: You need a lot of money to buy cryptocurrency
Most people learned about the existence of cryptocurrency when Bitcoin's price reached tens of thousands of dollars, which seemed to immediately exclude investors with budgets of a few hundred.
In fact, all services allow you to buy a portion of Bitcoin or another cryptocurrency. The minimum amount you can use to buy cryptocurrency may vary across different platforms.
By buying a portion of Bitcoin or another cryptocurrency, you will also benefit from their growth, just like those who trade in tens of thousands of dollars. If an asset doubles in price, for example, the investments of everyone holding it will also double. The same will happen in case of a decrease in the value of the crypto asset.
Myth 6: Only professionals can make money with cryptocurrency
There is a common belief that buying cryptocurrency is similar to trading on forex services. It is said that you should buy it when it decreases in value, sell it when it increases, and so on. For this, one should understand its trends, news, and reasons for daily price changes.
Of course, traders earn money this way. However, most cryptocurrency investors do not engage in active trading. They simply bought Bitcoin or other tokens and are waiting for them to appreciate. This strategy is used by those who see the potential of cryptocurrencies in the long term. The advantage of this strategy is its simplicity. There’s no need to check the rate every day and track the news.
Myth 7: Cryptocurrency can be easily stolen
The history of cryptocurrencies has many examples of exchanges going bankrupt, causing thousands of crypto investors to lose their money. Many stories recount the theft of cryptocurrency from wallets. However, similar incidents also occur in more regulated markets.
As specialists explain, the vast majority of thefts from cryptocurrency exchanges occur due to the owners’ own negligence. They reveal passwords or create them too simply. To avoid trouble, experts recommend setting up two-factor authentication. This means entering a special code that is sent to your phone or email, in addition to your password.
Cryptocurrency can also be stored in cold wallets. There are different types of them; it can be a special program on a computer or a device similar to a flash drive. They are considered especially secure, and breaking them is practically impossible.
There is also a risk of losing such a wallet or losing access codes to it. Reliable protection means that even the owner will not have access to the funds in such a case. Restoring data is practically impossible. This is comparable to a lost wallet full of cash. Therefore, in this case, the preservation of funds is the direct responsibility of their owner.
Myth 8: Cryptocurrencies are primarily used by criminals
According to the blockchain analysis company Chainalysis, the number of cryptocurrency transactions related to illegal activities last year accounted for about 0.15% of their total number. Mostly, such transactions were used for fraud. There are no significant indicators of cryptocurrency being used for selling weapons, drugs, or laundering money.
Governments of leading countries are working to close opportunities for money laundering or other illegal activities through crypto assets. Special legislation has been created, along with agencies that monitor this sphere. The need for data verification on almost all major exchanges is a result of this fight. Legislative requirements for activities in the crypto sphere will only intensify.
Myth 9: Cryptocurrency guarantees anonymity
This myth arose because cryptocurrency allows transactions outside the banking system. There are also anonymous wallets that do not require any personal data to be created.
At the same time, it should be noted that every transaction is recorded on the blockchain and stored forever. This means that if Bitcoin has been in a wallet associated with criminal activity, no matter how many times it is sent to other wallets, the information cannot be 'washed away.' Law enforcement agencies can access blockchain data and locate the person who conducted the operations. However, since this procedure is complex, it is only applied in special cases.
Myth 10: Everyone who buys cryptocurrency will get rich
There are many stories about people who bought Bitcoin when it was worth a few hundred and woke up rich a few years later. Similar cases occur with other coins that have appreciated dozens or hundreds of times. However, this does not mean that everyone who buys cryptocurrency will inevitably get rich.
It should be remembered that these are risky assets that can both increase and decrease in value. Moreover, their volatility is higher than that of stocks, real estate, or fiat currencies. Therefore, experts recommend keeping 5% to 10% of your savings in crypto assets.
New tokens are constantly appearing, and it is quite possible that some of them will increase in price hundreds of times. However, some will depreciate or even disappear. Therefore, professionals advise diversifying your cryptocurrency portfolio: keep most of your funds in popular cryptocurrencies like Bitcoin or Ethereum, and only a portion in new projects that seem promising. This will help maintain a balance between risk and return.
