Myth #1: Cryptocurrencies are purely speculative
Many investors believe that cryptocurrencies have little to no intrinsic value and are purely speculative. However, there are thousands of cryptocurrencies backed by actual businesses and protocols. These protocols establish how a specific blockchain or decentralized application operates. Evaluating protocols is similar to evaluating companies for traditional investments. Fundamental analysis can help determine whether a token has meaningful capital appreciation potential.
Myth #2: Cryptocurrencies are mainly used to fund illicit activity
While cryptocurrencies can be traded anonymously, all transactions are recorded on the public blockchain. In order to use the money outside of the digital asset ecosystem, a criminal needs a “fiat off-ramp” like a centralized crypto exchange, which is highly censorable. The data shows that the vast majority of crypto transactions are not used for illicit activity.
Myth #3: Cryptocurrencies are bad for the environment
Bitcoin’s energy consumption has been a concern, but recent studies show that its network may be significantly less energy-intensive than previously believed. Ethereum’s energy usage has also declined since changing to a less energy-intensive mechanism. Crypto’s energy consumption is more efficient compared to the traditional monetary payment system.
Ask an Advisor: Myths Clients Bring up Relating to Crypto
Cryptocurrencies Are Completely Anonymous
Cryptocurrencies are pseudonymous, not anonymous. Wallet addresses may be difficult to trace back to individuals, but once a wallet’s owner becomes public knowledge, its entire transaction history is accessible on the public ledger.
Cryptocurrencies Are Only Used for Illegal Activities
While crypto can be used for illicit activities, once wallet addresses become public knowledge, it becomes challenging to hide transactions from authorities. Fiat currency is still the best option for those seeking to stay under the radar.
Cryptocurrencies Are Guaranteed to Make You Rich Quickly
Crypto investments do not guarantee quick wealth. While there are success stories, many have lost everything. Due diligence and patience are necessary for successful crypto investing. Overnight millionaire expectations often lead to disappointment.
Hot Take: Charities Benefit from Cryptocurrency Donations
Anne Connelly has highlighted the benefits of receiving cryptocurrency donations for charities due to its transparency and ease of sending funds to recipients. Wellington Management also considers crypto as an asset class. In Turkey, a crypto boss received a jail sentence of over 1,000 years for bad business practices in the crypto space.
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