As the world learns about cryptocurrencies, more people get interested in this dynamic space. But sometimes, the more they know, the more they get confused by some of the persistent myths related to crypto. We have invited Greg Rogowski, the founder and brand owner of Mining City, to debunk some of the most persistent rumors out there.
Mining City is a platform that provides hash power to people interested in mining cryptocurrencies but who don’t have their private mining equipment. “I am in touch with our community all the time. They are often curious about myths going around in the crypto space,” he says. “It is not so easy to tell the facts from the rumors, so I am always glad to shine a light of truth.”
Here are seven of the most common myths regarding cryptocurrencies and what Greg Rogowski has to say about them.
1 – Crypto transactions are anonymous
One feature often cited as a benefit of crypto is that all transactions are anonymous. The truth with most cryptocurrencies is that the transactions are not “anonymous” but “pseudonymous” – a concept that can be confusing for many beginners.
Bitcoin and thousands of other coins do not disclose any personal information. If you look at any transaction recorded on a blockchain, you can indeed consider it to be anonymous. But cryptocurrency exchanges have become increasingly regulated and require people to register with a form of internationally recognized ID. Due to procedures that are part of this regulatory framework, transactions can be traced back to an identifiable individual.
Greg Rogowski: “Cryptocurrency transactions remain anonymous unless they are carried out on a centralized cryptocurrency exchange. The strict regulations imposed on exchanges allow law agencies to access the platform’s database and link identities to crypto addresses suspected of illegal activities.”
2 – Cryptocurrency trading is ‘easy money’
During the 2017 thriving market, cryptocurrency exchanges saw an influx of new investors looking to make quick and easy money. It was possible thanks to the design of crypto exchanges with their simple registration procedure. That’s how the myth of being able to get rich overnight was born. But the ease of registration only applies to cryptocurrency trading.
When fiat money is involved, it is not so straightforward. Users have to go through rigorous verification procedures. It is true that the potential profits in crypto trading can be high, but so can the losses. The volatile and speculative nature of the cryptocurrency market makes it a high-risk venture even for the more experienced traders.
Greg Rogowski: “The best strategy for beginners in the crypto space is to purchase or mine crypto and hold it until the coin achieves a desired price level.”
3 – Bitcoin’s hash rate isn’t real
One of the more obscure myths on the list is the belief that hash rate isn’t real and, therefore, it is impossible to prove that any work is being done. This myth can be debunked using simple mathematics or free tools such as blockchain explorers.
Based on the difficulty factor and the number of blocks mined, the hash rate of popular blockchain networks can be calculated. It may not be the most fun task on a Sunday afternoon, but with a bit of effort, you can verify the hash rates of even the most extensive networks (of up to 1012 or 1018) and prove that they are true.
Greg Rogowski: “Some coins are secretive about their blockchain and hash rate. But blockchain explorers of the established cryptocurrencies, such as Bitcoin, Ethereum and Bitcoin Vault, are available to the public and can be examined.”
4 – Cryptocurrencies allow fraudulent transactions
As cryptocurrencies only exist in a digital form, some worry that cyber attackers can hack into the system and start making whatever transactions they please. However, as cryptocurrencies operate using distributed ledger technology, they cannot be hacked using any available equipment.
Thanks to this technology, those participating in the network must reach a consensus before adding a transaction to the block. More prominent cryptocurrencies such as Bitcoin and Ethereum have thousands of participants worldwide who are constantly verifying transactions. A fraudulent move would have to fool 51% or more of that particular cryptocurrency community to be successful.
Greg Rogowski: “Cryptocurrencies operate using distributed ledger technology. This makes them heavily resistant to fraudulent activity and hacking. Bitcoin, the oldest cryptocurrency in circulation, has never been hacked or allowed for a fraudulent transaction to take place in its 11 years of existence.”
5 – Crypto can’t be used for payments
Cryptocurrencies have proven to be an excellent store of value in recent times. But a question frequently asked persists: What can I buy with it?
The answer is not that difficult: You can buy pretty much anything! Search engines such as Spendabit allow you to browse through millions of products that you can buy with Bitcoin.
Xbox, Paypal and certain airlines are beginning to support crypto payments, setting a new trend in finances. Coins can also be spent in most sales points through crypto cards that work as facilitators in converting crypto assets into fiat currency. Although those cards still do not represent a direct crypto transaction, it won’t be long until people start using cryptocurrency for payments in their everyday life, straight from crypto wallets.
Greg Rogowski: “It is possible to use crypto to purchase anything your heart may desire using various easily accessible platforms! Multiple conventional services already accept crypto and as large-scale adoption advances, more vendors will begin to look to crypto as a practical payment method.”
6 – Cryptocurrencies are not regulated
It is true that some countries have imposed severe restrictions or banned cryptocurrencies, but most governments are in favor of adoption. For example, the US government auctions off large amounts of Bitcoin it seizes from lawbreakers. For more info on cryptocurrency regulations around the world, see this Mining City summary article.
Greg Rogowski: “Only a handful of countries decided to ban cryptocurrencies. Most are making efforts to incorporate crypto into their systems.”
7 – Only criminals use crypto
This is the age-old myth that refuses to go away, mostly due to misconceptions and lack of information.
Unfortunately, at times things created with good intentions are used for malicious purposes. It is true that criminals turned to cryptocurrencies to avoid detection. But with advances in global regulations and anti-money laundering measures, it is becoming increasingly difficult to engage in such activities using cryptocurrencies, so cash is still the most common in black market transactions as it does not leave a digital footprint.
Greg Rogowski: “Crypto is available for anyone and it has been adopted by some ill-intentioned individuals. However, its use cases extend far beyond such illegitimate things. Global regulations are continually evolving to discourage and prevent the use of cryptocurrencies in illegal activities.”
It remains a confusing and foreign concept for many, but the Mining City founder believes that doubts will gradually fade. “There is more information on the subject and cryptocurrencies become more present in society. I expect that the line between fact and myth will slowly blur and a mature cryptocurrency ecosystem will flourish one day soon,” Greg Rogowski concludes.
We want to thank Greg Rogowski, the founder and brand owner of Mining City, to debunk some of the most persistent cryptocurrency myths.