Much like in any new investment area, digital assets like Bitcoin and Ethereum prompt a lot of questions from different people, from analysts to potential investors and everyone in between. As the popularity of digital currency rises through the years and enters more conversations beyond the financial space, the myths born from misconceptions and outright untruths grow along with it.
In this article, we will discuss and debunk a few myths associated with digital assets.
Myth: Digital Assets Are Primarily Used for Illegal Ventures
One of the most pervasive myths about digital currencies is that people commonly use them for illegal activities. While bitcoin can and was used for illicit activities in the past, the same can be said for conventional fiat currencies.
Interestingly, this myth has a sliver of truth as Bitcoin was popular in the black markets. However, it is vital to remember that it was illegal transactions and not cryptocurrency that gave it a bad name.
The truth is, crypto is a legal digital currency that people trade in the global foreign exchange. It also enables legitimate businesses to offer more accessible modes of payment to customers.
Myth: Digital Currencies Do Not Have Real Value and Will Eventually Disappear
Initially, governments had a hard time categorising cryptocurrencies, while investors were unsure as to how to fulfil their tax obligations with respect to their crypto assets. The newness of the currency and the confusion around how it should be treated contributed to the myth that cryptocurrencies do not have real value and would eventually disappear.
As more and more people shop and transact online, digital currencies are becoming more popular and prominent. People now know to treat digital currencies as traditional assets that they can use in exchange for services and goods according to the belief of the currency’s holders.
It is also worth noting that the Australian Securities & Investments Commission (ASIC) has released regulations on people’s tax obligations regarding crypto-assets, treating it as a currency like any other. Evidently, it proves that crypto is here to stay.
Myth: Crypto-Assets Are Not Secure
In the wake of cryptocurrency’s popularity, there have been multiple high-profile thefts and scams that left a bad taste in people’s mouths. In many of these cases, the culprits exploited the weakness in the digital wallets, currency exchanges, and other aspects of the budding crypto space.
These incidents had investors worried about the security of their crypto-assets and their susceptibility to frauds, thefts, and hacks. However, the blockchain network that uses cryptography and mining networks can effectively defend against attacks.
Furthermore, it is important to note that single points of failure are susceptible to bad actors. In this sense, it is not that digital currencies are not secure, but rather, it is more of actors making themselves more vulnerable.
Today, one out of five Australians own some type of digital asset. This fact, together with the ASIC’s recognition of the crypto-asset as a taxable asset, solidifies cryptocurrency’s footing in the financial world. However, there are still much to be done before digital currencies are recognised alongside ‘traditional’ and ‘conventional’ fiat currencies.
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