Cryptocurrency has attracted a lot of interest within the past decade. As such, there are plenty of misconceptions about it floating around. This is because cryptocurrency is still in its infancy stage, and people haven’t quite figured it out yet. The desire to understand cryptocurrency is understandable, but rushing into things isn’t going to do anyone any good. Some of these misconceptions are just plain wrong. Others are somewhat true, but they lead people to make the wrong choices when it comes down to investing in this booming market.
List of some Misconceptions about cryptocurrency:
- Blockchain and cryptocurrencies are the same things:
While Blockchain is the underlying technology of all cryptocurrencies, people often tend to confuse the two. Blockchain is like a ledger that is encrypted and decentralized. Cryptocurrencies are just one type of application that can be built on top of this ledger. There are plenty of other applications that use the underlying technology of Blockchain, such as smart contracts and insurance policies.
- Blockchains follow a similar way of operation:
Blockchains work in a completely different way from traditional databases. Blockchains contain blocks, and each block contains a transaction. A transaction can be one that is empty, or it can be full. On the other hand, in traditional databases, these are like huge files which contain separate entries for each row. This is called relational databases, and they’re not what one should use to build decentralized applications as they lack the flexibility to handle more complex data structures.
- Cryptocurrency cannot be tracked:
Since cryptocurrency transactions are very transparent, it’s easy to track them. The valid proof of work as long as there is no possibility of double-spending as it is a consensus mechanism which ensures that all blocks are in agreement with the previous one. This means that the ledger can be very easily kept up to date. The beauty of this system is that it doesn’t include any modification layer or other kinds of middlemen, which makes it difficult for anyone to stop any transaction from occurring. BitProfit is the perfect solution for those looking to invest in bitcoin without risking their hard-earned money.
- Interference to impose sanctions:
Those who put their hard-earned money into cryptocurrency will find it difficult for others to interfere with the way they invest. This is because of the nature of Blockchain, which makes it impossible for anyone to alter any transactions that have already been made. For example, if someone were to try and hack a blockchain, then they could just be bringing down all transactions that were previously placed so as to make them invalid. This is why there are no blocks that are updated or modified after they have been created on a blockchain.
- Environmental disaster:
Newer blockchains are smart enough to reduce the amount of power that they need in order to operate. As such, the usage of renewable and green energy sources will be more profitable for them. Some blockchains will even go to the extent of using this energy for transactions since it doesn’t incur any cost. This is because energy is often a currency on these systems, and people can use it in order to pay for services on the network or purchase cryptocurrency coins.
- Diverse industries cannot use cryptocurrency:
There are plenty of businesses that have started to accept cryptocurrency as payment. As such, it’s not always the case that industries will be made less diverse just because they start accepting this new payment method. There are already plenty of industries that use cryptocurrency, and many more will soon follow suit. If people have an industry in mind that is not currently accepting cryptocurrency, then they should look into how it can be changed to do so in the future.
- Controls cannot be imposed with Blockchain:
All cryptocurrencies that have been on the market for a while have their own built-in controls. This means that one can regulate and limit the amount of transactions that are made. This is done by using smart contracts or even just applying caps on the number of transactions that can be performed in a given period of time.
- Cryptocurrency has no value:
This is a misconception that many hold and even some experts believe this as well. This is because many people believe that the only things that have value are tangible and tangible items. There are already plenty of things that have value on this planet, and cryptocurrencies are just one of them. This means that there is always going to be a price for these currencies, even if they’re not considered to be money by some people.
Last words:
People are always going to believe things that they are told, and this is also one of the reasons why a lot of cryptocurrency myths exist. The best thing that people can do right now is to check out what the actual facts about cryptocurrency are. This will allow them to make the best decision when it comes down to investing in cryptocurrencies. It’s important to remember that everything is always changing, and new inventions are being designed all the time, so it’s something that should be taken into consideration as well.
