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The popularity of cryptocurrencies has increased over the past few years. The crypto market is thought to be rewarding, but it is also a crazy ride. With the latest market crash, many coins have already vanished. But the innovative technology that powers crypto will change how people think about money and finance.
Due to their complexity, cryptocurrencies are the subject of many myths and stereotypes. Crypto mining has come under scrutiny for its potential to encourage unlawful behavior as well as its effects on the environment. Furthermore, many people don’t even think cryptocurrencies have any intrinsic worth.
In this article, let’s debunk some top myths about Cryptocurrencies.
Myth #1 Cryptos are used for illicit and criminal activities
Although it is somewhat true that people first used cryptocurrencies on the dark web for illegal and morally dubious activities, the current crypto ecosystem is miles away from that. In fact, less than the traditional banking industry, only 0.34% of cryptocurrency transactions in 2020 were illicit, according to a report by Chainalysis.
Aside from that, notable investors in the crypto space include Elon Musk and Bill Gates, two of the most influential and notable figures in business and technology. Today, many investors utilize digital assets to store value and view Bitcoin and other cryptocurrencies as a hedge against inflation.
Myth #2 Cryptos are badly impacting the environment
Since it uses a proof-of-work protocol, Bitcoin is one of the most energy-intensive cryptocurrencies. However, many new and ongoing projects are switching to the proof-of-stake mechanism, which is more environmentally friendly and provides the same level of security. As an illustration, Ethereum is now switching to ETH 2.0, which will replace the PoS protocol with the PoW strategy.
Additionally, several cryptocurrency projects are actively investing in carbon-neutral measures to guarantee their net carbon footprint remains low, and alternative and clean energy sources increasingly fuel crypto mining.
To power their operations, bitcoin mining companies have also bought fossil fuel plants that had previously been shut down. Environmentalists and nations who are working hard to minimize their carbon footprints over the next few decades have additional concerns as a result of this.
Myth #3 Cryptos are only for seasoned investors
This is entirely false. One of the main goals of developing the idea of a decentralized currency is to give ordinary people more power and democratize the financial system by getting rid of intermediaries like government agencies and financial organizations. Although, from a technical standpoint, understanding blockchain and cryptocurrencies can be challenging, the core idea is relatively straightforward.
With a wide range of services, including cryptocurrency exchanges, brokers, and peer-to-peer networks, enabling simple trading and acquiring of digital currencies, cryptocurrencies have recently become more widespread than ever.
Myth #4 Cryptos is a bubble that’ll burst soon
Another prevalent misconception is that cryptocurrencies are just the latest fad or gimmick, which will pass. Because there will always be people in this world who desire a lot of control over their money and a mechanism to send money around the world quickly and cheaply, it seems unlikely that Bitcoin and other digital currencies will go away. The best thing about cryptocurrencies is that anyone may utilize them both short-term and long-term because they are self-contained and do not hang-on governments or the Federal Reserve to operate.
Myth #5 Crypto is nothing but a scam
As you can understand, there are positives and negatives in almost every industry. But unfortunately, every time an investor searches for a legal way to make money, a fraudster is also seeking a way to take advantage of them. As a result, investors are more prone to be cautious and overanalyze each choice when it comes to crypto investments.
Since they are not illegal, cryptocurrencies are not likely to be a scam. Therefore, it is safe to invest in virtual currencies as long as you monitor your risk effectively and be cautious.
Myth #6 Crypto transactions can’t be traced and are anonymous
A public ledger called the blockchain keeps a record of everything. Although there is some anonymity, it is still possible to identify users and their information in some circumstances. So there is user anonymity, but it’s not entirely assured, just like on other platforms.
Myth #7 Crypto trading is prone to hacks and scams
Employing a platform to trade in crypto is similar to using any other trading platform. The only method to protect your wallet and enable secure transactions is to increase the security of wallets that facilitate bitcoin trading.
Final words
To conclude, since cryptocurrency is still in its infancy stage, many people are scared to take the first step toward understanding this technology. However, a little information and awareness on this topic can go a long way in helping newbie investors take that first step into the virtual currency space.
Before investing in cryptos, always understand the pros and cons of investing, learn the myths and facts, and be aware of the tax and other regulations implemented on it. At last, DYOR!
Frequently Asked Questions
How Safe Are Cryptocurrencies?
Cryptocurrencies can be safe, but your crypto wallets can be hacked if proper security steps are not performed. There are also dangers and uncertainties associated with investments, and we cannot declare any virtual currency investment risk-free. Buying and selling cryptocurrencies does not have to be dangerous if the trader is well-versed in the market and treats his coins with care.
What Is Virtual Currency?
Virtual currency is a type of uncontrolled digital currency that can only be used online. It is exclusively stored and transacted using designated software, mobile or computer applications, or unique digital wallets, and all transactions are conducted through secure, dedicated networks. Because digital currency is just currency issued by a bank in digital form, virtual currency is not the same as a digital currency. Virtual currency, unlike ordinary money, is based on a trust structure and cannot be issued by a central bank or other banking regulatory organization.
Is Cryptocurrency Banned In India?
No, cryptocurrency is not banned in India. India has seen its ups and downs in the crypto sector concerning its legal status. The Reserve Bank of India (RBI) issued a circular in April 2018 advising all organizations under its jurisdiction not to trade in virtual currencies or provide services to assist anyone in dealing with or settling them. A government committee proposed outlawing all private cryptocurrencies in mid-2019, with up to ten years in prison and severe penalties for anyone dealing in digital currency. The Supreme Court overruled the RBI's circular in March 2020, allowing banks to undertake cryptocurrency transactions from dealers and exchanges.
Is Cryptocurrency Legal In India?
In India, cryptocurrencies are legal; anyone can purchase, sell, and trade cryptocurrencies. They are currently unregulated; India does not have a regulatory framework in place to regulate its functioning. According to the Ministry of Corporate Affairs (MCA), companies must now declare their crypto trading/investments during the financial year, according to the Ministry of Corporate Affairs (MCA). Cryptocurrency transactions have been taxable in India when people receiving such gains are Indian tax residents or where the crypto is considered to be domiciled in India
How To Invest In Cryptocurrency In India?
There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is the process of verifying and adding transactions between users to the blockchain public ledger. Purchasing cryptocurrency in India is a straightforward procedure where investors simply participate by registering with a crypto exchange such as WazirX. After registering for an account, citizens can trade multiple cryptocurrencies, store cryptocurrency in wallets, and more.
Can I Invest In Cryptocurrency?
Yes, with exchanges like WazirX, you may invest in cryptocurrency in India. To begin, go to the WazirX website and register. After that, you will receive a verification email. The link received by verification mail will only be available for a few seconds, so make sure you click it as quickly as possible. This will successfully verify your email address. The following step is to set up security, so choose the best solution for you. After you've set up the security, you'll be given the option of continuing with or without completing the KYC process.
Is Bitcoin And Cryptocurrency The Same Thing?
Bitcoin is a cryptocurrency that was designed to facilitate cross-border transactions, eliminate government control over transactions, and streamline the entire process without third-party intermediaries. The absence of intermediaries has resulted in a significant reduction in transaction costs. Satoshi Nakamoto, the creator of Bitcoin, created the first cryptocurrency in 2008. It began as open-source software for money transfers. Since then, plenty of cryptocurrencies have emerged, with some focusing on specific fields.
What Is Cryptocurrency?
A cryptocurrency is a digital currency secured by encryption, due to which chances of activities such as counterfeiting and double-spending taking place get close to impossible. Cryptocurrencies get created on blockchain technology ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are unique in that they do not get issued by any central authority. The term "cryptocurrency" comes from the encryption techniques used to keep digital currencies and the network safe.
Are Cryptocurrencies Legal In India?
In India, cryptocurrency is legal, and anyone can buy, sell, and trade it. Because India lacks a regulatory system to regulate its operations, it is presently uncontrolled. According to the Ministry of Corporate Affairs, companies must now document their crypto trading/investments inside the financial year.
Is Cryptocurrency Safe To Invest In?
Cryptocurrency investments are subject to market risks, but if sufficient security measures are not taken, trading accounts can be maliciously accessed. Investments come with risks and uncertainties, and we cannot claim that any digital currency investment is risk-free. Buying and selling cryptocurrencies can be risky even if the trader is knowledgeable about the market and treats their coins carefully.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
