5 Great Misconceptions about CryptocurrenciesBy CCTrader - August 24, 2018 |
The web is rife with information about cryptocurrencies, some of it good, some bad. With such a young industry it’s difficult to figure out which sources are credible because most companies in crypto are relatively new.
In this article we are going to dispel some of the most common misconceptions about cryptocurrencies that people tend to believe. These five points have been repeated so much online, that they are often taken as fact – so let’s dispel this misinformation.
Investing in a cryptocurrency early can yield profits further down the line
This is probably one of the greatest myths about cryptocurrencies, and it’s derived completely from the events of early Bitcoin investors, who bought in when the coin was cheap and ended up making millions.
This event alone however does not guarantee that any new cryptocurrency will follow in the same footsteps, or that it will have the same fate as Bitcoin. In fact most cryptocurrencies are specifically NOT Bitcoin, and not as successful as Bitcoin. A lot of new investors unfortunately fall in this trap of buying new coins early, and end up losing money if the coins are not successful – worse even if the new coin offering ends up being a scam.
Certain new cryptocurrencies use buzz words and language that is associated with other more successful coins – Blockchain is one you will see used so much, ever since it was popularised by the Ethereum cryptocurrency.
We advise you to be cautious about which new cryptocurrencies to invest in – it is responsible to be diligent when dealing with a new investment in the crypto market. The first steps to look out for is if a new coin is a scam or not when buying into an ICO. This is not always easy to tell, but make sure you’re buying crypto from reputable sources. Secondly, we suggest looking at what the long term plan for an offering is, and whether it shows promise. As with any investment it’s impossible to predict with certainty, but the general rule should be to inform yourself as much as you can before investing your money.
Cryptocurrency transactions are totally anonymous
One of the main selling points of crypto is that it’s decentralised and anonymous, but this may not always be the case.
In fact, the majority of all cryptocurrencies are on a public ledge that tracks how much is sent from one address to another. Before you start panicking, all of this is encrypted so you can’t simply transaction details, but the record is publically available nonetheless.
Governments are also enacting regulations that will make it easier to keep a record of cryptocurrencies, due to crypto being used for illicit purposes.
Cryptocurrencies are for criminals
It is true that cryptocurrencies are sometimes used for illicit purposes – in fact just recently Chinese authorities cracked down on a World Cup gambling ring that was using crypto. However these sort of activities have been happening well before the start of crypto.
The fact that crypto can be of use to criminals should not stop you from investing in crypto, and neither does it mean that the majority of crypto is used illicitly. Actually crypto activities can be more easily traced than fiat currency in some cases, making life harder for criminals using crypto. Crypto can be a great place to put your money if you cannot trust your bank or if you live in an unstable economy.
You need lots of money to invest in cryptocurrencies
People often measure units of cryptocurrency in the same way they do fiat currency, however this is not the case. Contrary to popular belief you do not need to buy 1 whole Bitcoin to invest it in for example – you could own a fraction of it.
Due to the high price of Bitcoin, investors are often hesitant, thinking they need tens of thousands to own a good portion of Bitcoin, however you can break a bitcoin down in as little as 0.00000001 of a Bitcoin, making the investment amounts much more realistic.
The same can be done with other cryptocurrencies, and most of them actually do not hold the value of Bitcoin so they are much more accessible. If you invest in crypto using CCTrader Crypto, you do not need a minimum amount to invest. Our platform allows you to invest smaller amounts as well as larger ones, and you could select the investment amount based on your investment goals.
It’s too late to begin investing in cryptocurrencies
Looking at cryptocurrency investment in this manner is short sighted. Yes, the Bitcoin boom has happened a few years ago, and you might have missed the boat of early investors who are now enjoying the spoils of early Bitcoin buying. But even if you invest smaller amounts today, with the objective of longer term investment, you can still make a solid profit.
The key to investment is to always have a plan, regardless of whether you’re investing in fiat or crypto. As long as you have an objective, a dedicated amount of money that you are willing to invest, and do your research well, crypto can still be a good place to invest.