The crypto world is complex, and it’s easy to get lost in all the noise which creates crypto myths. You might come across a variety of conflicting viewpoints and arguments, making it difficult to distinguish truth from fiction. Here are the top five Crypto Myths.
5 most common crypto myths and facts
Are you ready to realize that what you think is right is wrong?
Crypto myths #1: Cryptocurrency is always beneficial for criminals
It’s often claimed that a cryptocurrency is a hiding place for criminal activity. However, because crypto isn’t typically private, it’s not a good option for hiding your financial transactions.
Because there are so many hacks that make the news in conventional media, some individuals may believe crypto is a fraud-ridden nation. However, because their actions were broadcast to the entire globe on public blockchains, many of these hackers failed in their attempts to steal money.
In reality, many of these thieves or criminals were unable to withdraw their stolen money—or were eventually discovered. Blockchain networks are permeable and transparent, making them an unsuitable location for illicit activities.
Crypto myths #2: Energy use will always be a problem for crypto
There are a variety of methods for keeping the blockchain network secure. The most frequent solutions are Proof of Work and Proof of Stake. Proof of Work entails solving difficult math issues using a lot of computing power, thus consuming more energy in order to verify the chain.
However, unlike Proof of Work, Proof of Stake consumes far less energy since users stake some of their coins as a deposit to be an effective actor in validating transactions. There is no need for complex computations to authenticate the chain.
Proof of Stake (PoS) is becoming increasingly popular among newer blockchains, such as Solana, Avalanche, Terra, and Tezos. Furthermore, blockchain infrastructure is being developed to include sustainability and environmental responsibility as fundamental elements.
Crypto myths #3: Cryptocurrencies and blockchains are all the same
There are several distinctions between blockchains. The crypto universe is a kaleidoscope of networks and communities, with a diverse range of fundamental principles and purposes. The manner in which a blockchain network is structured has a big influence on its applications and users.
One source of variance in blockchains is that there are often trade-offs in performance or decentralization that need to be made in balancing the security, execution, and data storage layers of a blockchain. The decisions that engineers make when developing a chain’s architecture have significant consequences for the culture and applications that develop around it.
Some blockchains are designed for maximum security and uptime, but they can’t support apps; other blockchains, on the other hand, are more nimble and fluid, but they leave more potential vulnerabilities on the table. Many blockchains are focused on a single-use case, such as nonfungible tokens (NFTs) or gaming. Others, like Ethereum and Solana, enable app development on top of them. It’s critical to remember that the code that’s implemented has an influence on its users and the communities that form around a specific blockchain.
Crypto myths #4: Blockchain networks are both costly and ineffective
You’ve probably heard that blockchain networks cost a lot to use and that transactions take a long time to settle. While this may be the case with certain blockchains like Ethereum at times, it is not the whole story. For example; some blockchain networks, like Solana, are incredibly cost-effective and efficient, allowing for low-cost transactions that settle in a matter of seconds.
Because blockchain networks are built with security in mind, they collect transaction fees from users and distribute them to miners or validators who contribute to the network’s security. The cost of a transaction is determined by its size, which might increase or decrease depending on the quantity of data being sent. Because transactions are verified by computational power – and not just space – each miner in the network gets paid according to how much processing they contribute. Fees vary considerably based on the design of a specific blockchain as well as how busy the network is.
There are ways to reduce gas costs on Ethereum using the second layer of infrastructure, known as Layer 2s, which shares the security guarantees of the basic Ethereum chain but offers greater data throughput, resulting in reduced costs.
Crypto myths #5: Cryptocurrencies are a passing fad
Digital asset innovation is still in its early phases, but its influence will be broad and far-reaching. Despite the fact that some cryptocurrencies go through bull or bear markets, the decentralized finance and cryptocurrency community appears to be staying for good. Money has changed forms many times throughout human history, and crypto is yet another step in its evolution.
Many aspects of culture are already being transformed as a result of the transition to cryptocurrencies and digital assets. Cryptocurrencies are based on blockchain technology, which is a significant improvement in security and payments since it eliminates the middlemen that frequently cause paperwork, inefficiencies, and overhead costs. Code can operate as a trustworthy middleman to ensure the secure and verifiable transfer of assets from one party to another rather than a law firm or other third-party business using smart contract technology.
Cryptocurrency technology provides increased access to more possibilities for humanity at large by providing more efficient methods of conducting business, sharing ideas, and collaborating. Some form of cryptocurrency will almost certainly endure into the future because of the advantages accrued by adopting this technology.