Five cryptocurrency myths debunked

There is much talk about cryptocurrencies these days, more notably Bitcoin. Bitcoin was the major disrupt-er, and many have seen the light of day since then. While many still fail to fully understand cryptocurrencies and their purpose, myths and misunderstandings continue to surface as a result. Let’s have a look at a few I often meet whilst conversing with friends and acquaintances.

1. Cryptocurrencies have no real value

The value of a fiat currency is typically established based on the returns gained by holding it over time, which is due to interest rates. Why do you think the value of some currencies has fallen so radically in the past? Poor or negative interest rates. This ultimately means that you will receive no or little interest, or it will cost you money to hold any currency with a negative interest rate in your bank account.

Interest rates are the primary tool central banks have for addressing inflation and deflation, as the health of an economy is based on the rate at which people are spending money, also known as consumerism.

We don’t, as inflation and deflation don’t affect them. All we have is supply and demand, which is ultimately what establishes the value of cryptocurrencies (as well as other things). The more people want cryptocurrencies — or want to buy the tokens that represent a technology that addresses a technological challenge (e.g. domestic and international payments), the higher the price will go. Like anything bought or sold, it’s all about supply and demand.

Cryptocurrencies do have value, and the value will continue to rise as the demand for them continues to increase.

2. Cryptocurrencies are easily hacked

Bollocks. That was the short answer and here is a slightly longer one. Cryptocurrencies are no more vulnerable than any other piece of software you use or rely on. Does the fact that your bank, car, house, pacemaker or laptop, can theoretically be hacked, stop you from using it? Of course not. We all use them — as well as other technologies, and we will continue to do so. What we can do is try not to act like an idiot and do something that would expose ourselves to any additional, unnecessary risks. The same applies to cryptocurrencies.

Cryptocurrencies are no more vulnerable than any other software.

3. You can’t use cryptocurrencies anywhere

You can use cryptocurrencies to buy anything you can imagine.

4. Cryptocurrencies are used by criminals

In the US, with what do people pay for guns? Bottles of water? No. Weapons, drugs, assassins, malware — as well as other illicit items and activities have traditionally been purchased using fiat currencies. Wars are financed with whatever fiat currency the involved parties have at their disposal. This is a poor and ungrounded argument, and simply an attempt to appeal to someone’s conscience and sense of ethics. I think that we can all agree that fiat currencies have more blood on their bills than any cryptocurrencies will ever have on their bytes.

5. Blockchains have no business or commercial applications

They have tremendous business and commercial applications. Let’s have a quick look at a few of many:

The list could go on — and as we move ahead in time, the list will continue to grow.

Conclusion

Cryptocurrencies are here to stay, and I think they are a breath of fresh air for many reasons. They solve some of the biggest technological challenges we are currently facing, and they provide some good old fashioned competition to mainstream economics, as consumerism is a terrible way to measure the health of any economy, as it so obviously represents the opposite.

References

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