Fact or fiction? Cryptocurrency myths you’ve probably believed

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September 18 2019
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While savvy investors have already made a fortune trading cryptocurrency, the general population is still sounding out skewed beliefs about the asset class, so one CEO wants to set the record straight.

Rob Wilson, the creator of Australia’s first cryptocurrency and CEO of Incent, has said there are four main myths consumers are being misled by when it comes to cryptocurrency, and he’s on a path to help the population better understand the future of money.

Here, he’s deconstructed the four main myths to help people better understand the crypto craze.

1. Cryptocurrency and blockchain are the same thing.

Cryptocurrency is an internet-based medium of exchange.

Mr Wilson said its decentralised nature is the most important characteristic to distinguish it from other currencies, as it is without ties to any government or entity.

In contrast, blockchain is essentially a database or a system for storing and finding information, the CEO outlined.

“Most likely due to the ties between the two, combined with the prevalence and popularity of Bitcoin, many people confuse crypto and blockchain,” Mr Wilson continued.

2. Cryptocurrency is dirty money, primarily used for illegal activity.

Due to cryptocurrency’s decentralisation, the CEO acknowledged a commonly held belief that alternative currencies must be used for criminal activities.

While it is undeniable that cryptocurrencies have and will be used for criminal activity, every transaction is recorded and is visible to everyone through blockchain.

Criminals have been around for far longer than any crypto asset, Mr Wilson was quick to highlight.

“After all, money laundering and the drug trade have been around for centuries, well before the first crypto was brought into the market.”

As the technology becomes more understood, Mr Wilson has predicted that fewer people will use the currency for nefarious reasons.

“However, the assumption that cryptocurrency makes illegal activity easier or that it is used more in illegal activity than the US dollar is fundamentally incorrect,” the CEO explained.

3. Bitcoin can be randomly created or hacked because it isn’t guided by the same rules as fiat currency.

The most famous crypto asset, Bitcoin, has similar characteristics to fiat currency, with the one big difference being decentralisation, according to Mr Wilson.

Shutting down this myth entirely, the CEO said: “It goes without saying, Bitcoin cannot be created out of thin air.

“There is a finite amount of Bitcoin – 21 million to be precise.

“It also abides by the rules that we use to decide whether or not something is ‘money’: it’s uniform, divisible and portable.

“In that sense, its parameters are much the same as the US dollar.”

4. As cryptocurrency is digital, it doesn’t really exist.

Again comparing crypto assets to fiat currency, the CEO explained that just like money exchanges online, similar transactions take place with cryptocurrencies. This means the alternative asset class is just as real as traditional assets.

“A lot of us struggle to believe in or understand those things that we cannot touch or see, and that sentiment seems to have been applied to cryptocurrency as a whole,” Mr Wilson offered by way of reasoning.

“You could even say that cryptocurrency is more ‘real’ than commonly traded assets, like gold.

“More gold is bought and sold than actually exists or has been mined – something that can’t happen with cryptocurrency.”

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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