Cryptocurrencies are digital currencies/money which use online ledgers with strong encryption to secure transactions. They are a store of value and a means of exchange using Blockchain technology without the need for a third party or central authority such as the central/commercial banks, ensuring privacy and anonymity.
Cryptocurrency has gained popularity and mass adoption to a certain degree over the years. While it is impossible to know everything about cryptocurrency, it is expected that the public shouldn't be oblivious to the basics of cryptocurrency, which should mean that certain myths and misconceptions about it should have been dissolved and wholly eradicated.
Unfortunately, certain myths and misconceptions still exist even with the advent of crypto-social platforms such as Hive, Leofinance, noise.cash, and many others whose aim is mass adoption by educating and allowing us (noobs and enthusiasts) to have a grasp and feel of cryptocurrency via the incentives received for writing/socializing without the need for prior knowledge or buying with your own money.
Cryptocurrency Myths
Cryptocurrency is often considered a scam and a den of thieves which allows money laundering to flourish. Religious fanatics call it the Mark of the Beast, while noobs consider it a get-rich-quick scheme without understanding the mechanics involved. They want to make quick money without understanding that cryptocurrency is actually money, and not a means to make money.
These beliefs, unfortunately, have discouraged potential users from getting into the world of cryptocurrency and have slowed down its adoption. Since myths and misinformation spread faster than the truth, it would be wise to highlight some of these myths in a bid to make matters clearer for the ignorant.
Below are some crypto myths that need to be eradicated.
A get-rich-quick scheme
Contrary to popular belief, cryptocurrency is not a get-rich-quick scheme, nor is it a Ponzi or pyramid scheme. This mentality resulted from the fact that several people were onboarded unto cryptocurrency with the promise that they would make a lot of money in a short period of time by investing a certain amount, without making them understand that crypto is not a means to get money, but crypto is in fact money but in digital form.
A common onboarding strategy for newbies as observed in my few years in the crypto world is the buy low, sell high, and make a profit, without providing them with any basic knowledge or educating them on the crypto mechanics and the real purpose of its existence.
Unfortunately, crypto is terribly volatile and does not guarantee that you will get richer or poorer at any point. People dive in without any prior knowledge due to the false promises of 'buy and get rich' by the crypto onboaarders and end up losing a lot of money. This is what led to the mentality that cryptocurrency is a scam.
Cryptocurrency is a scam
Cryptocurrency prices are highly volatile and incredibly unpredictable. This could threaten the finance of whoever ventures into it, with or without research. Yet, this does not necessitate the scam tag often attributed to it.
Newbies without prior knowledge may buy what they feel is the bottom of the chart, and when this backfires, they lose money and call it a fraudulent system.
A scam refers to a dishonest or fraudulent person or system. Calling cryptocurrency a scam is wrong since there is no central or controlling body, unlike conventional money. This means that your money is not going to anyone but is completely under your control, and you are responsible for your risk management.
While several people may have actually been scammed by fraudsters posing as crypto sellers on the internet, it should be known that scammers exist in every financial sector. This does not mean that the system is a scam or is designed for scammers to flourish. The scammers simply leverage on people's ignorance and get away with it as is commonly seen in other financial sectors.
A Gateway for money laundering
The purpose of cryptocurrency is for ease of transaction, full control and ownership of funds while ensuring privacy and anonymity. While money laundering may take place on the blockchain because it is simply inevitable as seen with paper money, cryptocurrency is not designed specifically for that purpose.
Money laundering exists in every financial institution. The term 'money laundering' wouldn't exist in the first place if it doesn't already take place in the financial world before the advent of cryptocurrency.
As long as money exists, money laundering will always exist. This does not mean that money is originally designed for that purpose. If cryptocurrency is evil, then CBDC is its cousin.