Top 5 cryptocurrency myths

As the first crypto created, it’s no surprise Bitcoin is the most valuable—and  most famous—crypto of all. Yet the crypto world is much broader than a single currency. Ethereum is another key player, a cryptocurrency platform popular for its smart contract function, which automatically executes  transactions once set conditions are met. 

Then there’s crypto tokens to consider. While crypto coins are native to the blockchain, and function like non-digital currencies in that they hold value and can be exchanged, crypto tokens are built on top of a blockchain’s native coin. They come with uses other than being a form of money, and include utility tokens, security tokens and non-fungible tokens (NFTs). 

It’s a common misconception that cryptos are solely speculative assets for short-term gain—a view fueled by the sudden rise and fall of cryptos without any real utility to back their value, such as the infamous Dogecoin. But many cryptos do have real-world utility, while there’s also real value to be found in the technology behind cryptos: blockchain.

Almost all cryptos are built with blockchain technology, which offers unparalleled transparency, security and decentralization. Every transaction on blockchain is traceable and irreversible, protecting users from identify theft and ensuring they can trust the data they’re presented with. It also means businesses can trade 24/7, compared to bank transfers which typically have cut-off times, providing a new way of doing business.

At first glance, the lack of personal information required to complete crypto transactions might be seen as fuel for criminal behavior. But it actually creates a whole heap of evidence. Most cryptos are not entirely anonymous but pseudonymous. This means that instead of obscuring your identity entirely, your name is replaced by your crypto wallet address—a series of letters and digits up to 35 characters long. 

Ultimately, blockchain is designed to offer transparency. Public addresses and transaction histories are recorded on the blockchain ledger, allowing for a degree of traceability. Through in-depth research, it’s possible to link a wallet address to the human who owns it; a deterrent for those engaged in criminal activity.

The regulatory landscape is evolving rapidly, with regulatory bodies and governments worldwide working to introduce guidelines for the crypto industry. New rules are aimed at providing legal certainty and protection for users in the crypto space, thereby encouraging greater investment into the market. 

The European Union’s Markets in Crypto Assets regulation (MiCA) came into force in June 2023, with most of the regulation set to apply from 30 December 2024, in what is a world-first package of comprehensive rules for the sector. Meanwhile Australia is expected to release draft legislation in 2024, and in the US a recent directive has given regulators the agency to impose regulations, with the aim of protecting investors and cleaning up illegal activity.

Cryptos have been around for years and still aren’t accepted by many major retailers, showing we still have some way to go before they’re used exclusively. The public will need a massive mindset shift to transition to a digital currency. Instead, we’re more likely to see a gradual integration of cryptos alongside traditional finance systems, giving the world time to familiarize itself with this innovative technology.

Crucially, crypto isn’t in direct opposition to the banking sector. Major finance is now piling into the crypto space, most recently with big ETFs (exchange-traded funds) being offered by traditional players like Blackrock. As crypto starts being more readily accepted by existing financial institutions, things could change very quickly…