5 Crypto Myths – and What’s True About Them
Bitcoin and other cryptocurrencies are a bubble, can be easily hacked, and are often viewed as tools for criminal activities—but is that really the whole truth? We have investigated the most persistent rumors from the cryptocurrency world to paint a clear picture and shed light on the reality behind these claims.
The myth:
The claim that the price of cryptocurrencies and Bitcoin is a bubble that could burst at any moment is often compared to the internet bubble of 2000.
The truth:
Bitcoin and other cryptocurrencies have indeed experienced spectacular price gains in the past, but also equally dramatic crashes. However, many factors argue against dismissing cryptocurrencies simply as a bubble. Beyond their volatile nature, there are numerous real-world applications that make digital currencies far more than mere speculative assets.
For instance, they are used for international transfers, which can save both time and money. Traditional financial service providers often charge high fees and take several days to process cross-border transactions. In contrast, cryptocurrencies allow for fast and low-cost transactions, directly between parties without relying on banks or intermediaries.
Furthermore, more and more companies and institutions are accepting cryptocurrencies, especially Bitcoin, as a form of payment, further increasing their legitimacy and acceptance. This growing real-world adoption shows that cryptocurrencies can offer real utility and value beyond mere speculation.
The myth:
Since cryptocurrencies like Bitcoin cannot be controlled by any central authority, they are often used for illegal activities, such as money laundering, fraud, arms, or drug trafficking.
The truth:
Like any other form of payment, cryptocurrencies are occasionally used for illegal activities. However, it is important to note that the most commonly used payment method for illegal activities remains cash — specifically the U.S. dollar (USD). Globally, up to 5% of transactions are considered illegal, while for cryptocurrencies, this figure is currently only 0.24%. This suggests that cash is significantly more anonymous than cryptocurrencies.
A key reason for this is that all cryptocurrency transactions are recorded on the blockchain, which is publicly accessible. In contrast, cash offers greater anonymity as there are no records of transactions. Despite this, most cryptocurrencies are actively working to enhance the security and transparency of their transactions to curb illegal activities and strengthen user trust.
The myth:
As digital payment systems, Bitcoin and other cryptocurrencies are vulnerable to cyberattacks and can be easily hacked.
The truth:
In the past, media outlets have repeatedly reported on hacks involving crypto assets. However, these incidents were mostly due to human error or weaknesses in the security infrastructure. Generally, cryptocurrencies are considered more secure than traditional financial instruments, as they are based on a decentralized blockchain infrastructure (DLT). This structure makes it more difficult for attackers to manipulate or disrupt the system.
By using secure offline wallets and storing passwords safely, you can significantly reduce the risk of hacks. It is highly unlikely that you will fall victim to hacks if you follow these proven security practices.
The myth:
Crypto payments are not managed by any central authority, and transactions cannot be traced back to the user who made them. Therefore, they are anonymous.
The truth:
Unlike bank payments, transactions with Bitcoin and other cryptocurrencies do offer a certain level of anonymity. After all, every bank knows its customers, and each payment is linked to a person's or company's name. However, cryptocurrency payments do not require personal information about the sender or recipient. But crypto transfers are not entirely anonymous. Each transaction has a unique identification number and is recorded on the publicly accessible blockchain. This is referred to as pseudo-anonymity. This means that a user operates under an alias or username rather than their real name.
The myth:
Bitcoin and cryptocurrencies are often criticized for their high energy consumption, which frequently comes from fossil fuels. This leads to significant CO₂ emissions and contributes to environmental pollution.
The truth:
Some cryptocurrencies, especially Bitcoin, have been criticized for their relatively high energy consumption. However, advancements in technology and algorithms have significantly reduced the energy requirements of cryptocurrencies. Additionally, there is an increasing shift toward renewable energy sources such as wind, solar, or hydropower to make cryptocurrency operations more eco-friendly. There are even cryptocurrencies like SolarCoin that are based entirely on renewable energy sources.
While the environmental impact of cryptocurrencies is continuously improving, there is still potential to reduce their CO₂ footprint further. The industry is aware of this challenge and is actively working on solutions to minimize its environmental impact.
It becomes clear that while many criticisms of cryptocurrencies and Bitcoin contain a grain of truth, they can often be debunked upon closer examination.
- Chainalysis: 2022 Crypto Crime Report
- UNODC: Money Laundering
This article does not constitute investment advice or a solicitation to buy or sell digital assets or other financial instruments or to enter into any other financial transaction. The main purpose of this article is to provide general information. No representations or warranties, express or implied, are made regarding the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. Therefore, it is advisable not to rely on the fairness, accuracy, completeness, or correctness of this article or the opinions contained herein. Some statements in this article may contain forward-looking expectations based on our current views and assumptions. These statements are subject to uncertainties and may lead to actual results, performance, or events differing from the statements made in this article.
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It is important to note that investing in digital assets carries risks as well as potential gains.
