Top 10 Cryptocurrency Myths Every Student Should Know
When studying at a university, most of the students dream of having their own business. Especially, during the current technological development of crypto-related businesses are the most desired ones. So there are things they should definitely consider when delving into the cryptocurrency business world.
Overall, digital currencies have become one of the most expensive yet profitable factors of investment. Especially bitcoin, which is now equivalent to 58,981 USD. Earlier than cryptocurrencies, gold and companies’ shares were the most preferred factors of investment among the general people in business.
But, since the beginning of cryptocurrency and easy ways for buying or getting these digital currencies online, the general public’s interest in it has also risen. Today, you can exchange BTC to USD legally and quite easily.
Here’s a fact related to human behavior, when there’s something brand-new in the market, non-authentic facts about them manipulate people’s minds.
Similarly, since the introduction of Cryptocurrency at the public level, there are several myths that you may hear from multiple resources.
Not only this, but a few newcomers in the industry also believe in the cryptocurrency-related myths and end up in disappointment.
Today, let’s take a glance at the top 10 cryptocurrency myths the youngsters should be aware of. Here are some “true” facts that resolve such myths.
Here we go!
Myth 1: Cryptocurrencies are non-taxable
Many students think that crypto is an online business so they can avoid any taxes. When exploring more, you may come across a statement saying that cryptocurrencies are not controlled or ruled by the government or banking institutions.
Indeed, it is an independent digital currency that computer systems control. It is true. But, a “False” that arises from this fact is that cryptocurrencies are non-taxable.
Again, myth-supporters will support their statement by stating the following arguments:
- Since neither the Government nor the banking institution creates or controls cryptocurrencies like Bitcoin. Thus, they are not worthy of receiving “a part of profit” in the form of taxes.
This argument is undoubtedly strong.
However, the fact is as following:
Fact: To begin with, Governmental authorities all over the world do not count cryptocurrencies as actual currencies. Indeed, for banking institutions, cryptocurrencies like Bitcoin are capital assets (meaning, stock in the hands of a businessperson or investor). Therefore like other capital assets (for example, freight), cryptocurrencies remain taxable.
For example, in the United States, the Government charges taxes on cryptocurrencies based on the holder’s income. Meaning, if the cryptocurrency investor earns 40K USD per annum, he/she is not liable to pay taxes. But, if annual income touches 441450 USD, the 15% tax rate is valid and remains payable.
Similarly, if the income is more, 20% remains taxable. Yet, a few conditions apply, such as the bitcoin holder must keep bitcoin(s) for more than a year. Apart from this, the long-term and short-term capital gains also play a major role in the bitcoin tax calculator system.
Myth 2: Cryptocurrency is not as equally valued as real currency
In today’s developing world, it is in human nature that he believes in what he can see!
Isn’t it true?
But, in the 21st century, the world has modified. Technical experts all over the world have created a “virtual” universe where humans exist in the form of “data.” From online shopping to online payments and whatnot, this virtual world is absconding.
Hence, the world is currently divided into two, those who believe in Cryptocurrency to be real money and those who don’t.
But, here’s the truth: Cryptocurrency is equivalent to real currency. Nowadays, it has become common. Even top-notch regular stores like Target accept payment in cryptocurrencies like bitcoin or litecoin.
Yet, the value of cryptocurrencies is so high that they are not very basic among the general public.
For the most part, one bitcoin is around 59 thousand USD(s) approximately which is a large value. In the 2000s, when the first-ever decentralized Cryptocurrency, i.e.., bitcoin, made it into the market, it was worth less than 0.01 USD.
Later in 2013, bitcoin started to boost, and its value reached over 12 hundred US dollars.
Apart from all the above arguments, people believe in this myth because, to these people, the “Gaining procedure” of cryptocurrencies is incomprehensive.
For example, in the beginning, bitcoin mining was a major stage for people to get bitcoins. And this mining includes verification of transactional blocks, which demand a very high knowledge of computer systems and networks.
Hence, if we view history, it is portrayed that cryptocurrencies are made for hackers, tech-savages, and cloud-based companies. But it’s not! Today, gamers, influencers, and the general public everyone can buy and invest in Cryptocurrency online.
Myth 3: Cryptocurrency is illegal and triggers money laundering
Calling out Cryptocurrency as an illegal form of currency is very common among the general public that takes an interest in finance and political arguments.
Since 2008, bitcoin, one of the most prominent cryptocurrencies, is running successfully in countries like the United States, India, and China.
Not only this but in China, the finance minister also publicly expresses that they consider bitcoin to be a “commodity” instead of real money.
However, it is not considered illegal.
Whereas countries like Russia, Algeria, Bolivia, and Ecuador have banned cryptocurrencies. Here, the myth is debatable because, in the United States, Cryptocurrency is equally worth it as a legal tender.
In South Korea as well, authentic residents are authorized to buy cryptocurrencies or mine them online. Thus, from a few countries’ point of view, Cryptocurrency is not illegal.
For example, India (which is still in the stage of development) is pushing the use of cryptocurrencies to robust the power of digital money transactions and security systems.
Fact: Therefore, it can be said that Cryptocurrency is not illegal. However, if an investor blinds to pay taxes on cryptocurrencies (after making a countable profit) or uses cryptocurrencies to run illegal businesses, only in that case it will be illegal.
Above all, the act of “cryptocurrency laundering” has also become a part of cybercrimes.
To begin with, cryptocurrency laundering happens because online websites or apps, or wallets allow the user to add a fake name to the wallet. Meaning, the identity of the user remains anonymous. This payment concept is known as pseudonymous. Yet, it is very rare.
Myth 4: Cryptocurrencies are a way for criminals to getaway
When it comes to the utilization of digital currency, which is transferable without verifying any form of bank account information or legal identification of the user, cryptocurrencies are taken for power in the hands of criminals. You may hear from many around you that cryptocurrencies are used for illegal purposes.
However, this is times have gone students!
After the event of the Silk Road Raid in 2013, Governments all over the world have taken action on making the use of Cryptocurrency legal and secured.
Indeed, countries like India have introduced KYC or Know Your Customer Policy for every individual that opens up a bitcoin wallet. This helps the authorities to create data on the bitcoin holder by asking them to submit or upload verification ID online.
Also, KYC includes a “fingerprint” verification procedure for strengthening the system.
Thus, the use of Cryptocurrency in black markets and casino(s) is no longer a statistic.
Myth 5: Cryptocurrency Blockchains are monetary cloud-like database
To newcomer investors, Cryptocurrency mining seems like a very complicated and tech-savvy subject to understand.
For example, inexperienced investors may tell you that blockchains are a type of storage facility for users to save bitcoin or litecoin. But that’s untrue.
Indeed, blockchains are quite similar to “ledgers” that are prepared in finance and accounting. Meaning, Blockchain, and cryptocurrency-based transactions. The Blockchain ensures that the bitcoin miner does not repeat transactions.
Thus, it increases the level of transparency.
Comparing cryptocurrency blockchains to cloud databases will express that blockchain stores files. But that’s not at all true.
In the future ahead, there is a possibility that blockchains will store multiple forms of data.
However, for now, cryptocurrency blockchains are simply a group of blocks chained together.
Moreover, each block contains a ledger.
Thus, once a block has been resolved and verified, it chains to a blockchain. This process remains irreversible. This fact also supports the false narrative of Cryptocurrency being a scam.
Myth 6: Students might think Bitcoin is the only hardcore valuable Cryptocurrency
It is without a doubt that bitcoin is one of the most prominent cryptocurrencies in the world. Wherever you go in the United States, you can locate multiple Bitcoin ATM(s) in an area. But, have you ever come across any website, ATM, Game, or mining firmware that offers to deliver Cryptocurrency other than bitcoin.
However, to the reader’s surprise, bitcoin is not the only valuable Cryptocurrency in the world.
Today, less-expensive cryptocurrencies like litecoin and Etherum are gaining prominence among the general public.
Recently, Etherum got the high-end attention of investors into the market due to its improved liquidity ratio as well as a transfer value.
If you are trying to figure out the “value” of a cryptocurrency based on its market value, it will be a worthless estimation. The reason being, the value of a cryptocurrency does not depend on its market value.
However, it depends on which currency is holding the highest interest of the general public, investors, and business people.
According to a few business research and finance reports, Etherum will be the next in line to compete with Bitcoin.
Myth 7: The risk of “hacking” is infinite
One of the major myths that cause the new coming investors to run away from cryptocurrency investment offers is the risk of “hacking.” Hackers or the vulnerability of the world wide web towards hacking is no longer rare. Small hackers start by hacking into people’s social media accounts.
However, experienced and greedy hackers may directly get access to your monetary sources like a bank, PayPal, Wire transfer account, or maybe Bitcoin Wallet Account. But, the latter part is not true.
Above all, Bitcoin, Cryptocurrency, or BlockChain are new to the industry. There are very few chances for any experienced hacker to figure out such a high-end technically tangled blockchain of the ledger in years. Within ten years since its introduction, only 25% to 30% of the world’s population has clearly understood the concept of Cryptocurrency.
Since it’s widely new to the people, there are very few participants. And meanwhile, the risk also eliminates.
Apart from this, if you are still worried about risk or hackers prying on your device, here is what you can do:
- Always prefer genuine cryptocurrency websites to buy BTC or ETH.
- Don’t put all your savings into Bitcoin at the first-stage of investment.
- Keep an eye on the regular fluctuation of cryptocurrency prices in the market due to improvement or decrease in market capitalization.
- Do not give away your device to an unknown person for any given reason.
- Avoid connecting with public wireless connections or WLAN.
Myth 8: The risk of “counterfeit” in cryptocurrency is unavoidable
Whether you call it a myth or confusion or a problem in understanding how Cryptocurrency works, cryptocurrency counterfeit is a stretched subject in the market. Meaning that since there is no physical existence of Cryptocurrency.
Thus, the possibility of counterfeit arises.
However, it is technically untrue. The reason being, cryptocurrencies run on unique codes. For example, likewise, your system has a unique IP Address.
Similarly, bitcoin also has a unique code. In this way, the identification of BTC(s) and other cryptocurrencies is processed.
Apart from this, the possibility of duplicates in Cryptocurrency exists.
However, the computer systems and software specially made for bitcoin mining and transactions immediately locate the duplicate transactions/blocks and crash them out.
More often than not, the spreaders of this myth may come up with an argument including “double spending” of bitcoin or any other cryptocurrency to counterfeit. Here’s a simple explanation for it.
Bitcoin exists virtually in the form of “blocks” in Blockchain. Therefore, when a user transfers a bitcoin to another user, he loses one block. Therefore, the total number of bitcoins in hand decreases as the Blockchain becomes smaller.
Above all, the risk of double-spending is very less. The reason being, to double-spend a bitcoin, the user will need an impossible amount of computation power. Hence, this scenario is nearly impossible. As a consequence, there’s no technically true-and-tried method to counterfeit Cryptocurrency.
Myth 9: Cryptocurrency = SCAM
No matter how serious this myth sounds, the arguments behind Cryptocurrency being a large scam are worth mentioning.
Students, calm down!
If you see, any industry in the world is filled with positives and negatives. A place where an investor finds an opportunity to make a profit in a legal way, there’s always a party present that finds a way to scam the investors.
Therefore, it is rather common for investors to be cautious and overthink their every move when it comes to Cryptocurrency.
Since one cannot see Cryptocurrency apart from its virtual presence in wallets, there is very little potential for Cryptocurrency being a scam because it has been non-prohibited by the Government itself.
Indeed, it is a matter of good and bad investment.
If the investor is focused and experienced enough, he can go a long way in making a profit out of cryptocurrencies in the long run.
However, if the investor makes a greedy move by dealing with an anonymous cryptocurrency buyer or seller, it is simply akin to blindly falling into a scam scheme. That’s why you should explore the best platforms to buy or sell cryptocurrencies. You’ll need this in the future.
Myth 10: Cryptocurrency transactions leave no tracks
Come again? Well! If you have been told that “cryptocurrency” acts as a mask for criminals to process illegal transactions without leaving any traces, it is their misconception.
The reason why people believe in this myth is that Cryptocurrency is highly dependent on blockchain technology which is known for its anonymity feature.
However, blockchain technology not only identifies and validates each transaction but also records each transaction automatically.
The thing about misconceptions is that the myth-spreader only knows the part-truth. The idea of Cryptocurrency has not become regular for people yet. Cryptocurrency mining has started to attract multiple large organizations to invest in technology.
Yet, there are those who protect against crypto mining because it uses so much electrical power that it will leave the earth with nothing to rely on. Again, it is only partly true.
As long as the cryptocurrency industry pokes into the traditional finance system of the world, myths and facts will keep interrupting your power to invest.
There’s no doubt that Cryptocurrency is the future of the financial world. For more information, get in touch.