Inside the Briefcase
5 Things Many People Still Don’t Understand About Cryptocurrency
May 1, 2023 No CommentsFeatured article by Atreyee Chowdhury
Bitcoin went up 193,639.36% between 2012 and 2020.
That number alone should tell you what the future holds. We are living in the era of one of the most significant financial evolutions. If we don’t catch up now, it’ll be too late sooner than you expect.
We see more and more cryptocurrency in everyday news. What was once a niche and unconventional sector is now within reach of all. You may have come across word of China banning crypto. You may also have seen news of El Salvador legalizing crypto. If you have never paid much attention to these news pieces, it’s time you do.
If you feel that you do not need to think about cryptocurrency, we urge you to think again.
The earlier you learn and adopt this digital currency, the better it is for your personal and professional finances.
To give you a head start, here are five things about crypto that most people still do not understand.
Over 70 million people have registered for blockchain wallets in the 2nd quarter of 2021 alone.
Blockchain technology, which drives cryptocurrencies, is one of the most exciting and promising technologies of our era.
When you refuse to engage in crypto, you are essentially refusing to enter a market worth billions of dollars. Cryptocurrency appears to be a confusing, often bizarre, subject. However, once you devote some time to learning about it, you can profit in more than one way. The world of cryptocurrency is ever-evolving and waiting to be explored.
Here are five things many people still do not understand about crypto. Understanding these basics will put you in a better place than a significant section of the population.
1. Blockchain is the future of tech
When we say ‘blockchain’, an average individual automatically associates it with cryptocurrencies. You might be surprised to know that crypto is just one of the many applications of Blockchain.
Presently, Blockchain and crypto go hand-in-hand. However, we can expect to see the application of Blockchain in many different sectors in the coming years.
So, what exactly is Blockchain?
Blockchain is a technology that helps us make peer-to-peer transactions. To do that without a centralized entity, it makes use of DLT (Distributed Ledger Technology). Blockchain is one comprehensive database that cannot be corrupted or hacked. It records every transaction chronologically. To verify a transaction, Blockchain uses independent system participants.
As you can see, Blockchain works as a record-keeper of all transactions. Now think of the multiple sectors of society where we need a reliable, secure method of recording transactions. We may not be far from the day when Blockchain is the leading medium for peer-to-peer transactions.
You can start learning about crypto by learning about Blockchain first. Since all cryptocurrency transactions take place over this medium, you will need a working knowledge of it to start investing. Knowing that the technology will take over other sectors is an added impetus to learn.
2. Cryptocurrency is not unregulated
The heading might come across as a shock as most people think cryptocurrency is an unregulated space. That is also the reason many businesses and individuals choose to stay away from it. However, this is not entirely true.
Different countries have different levels of regulation for cryptocurrencies. Most countries around the globe allow cryptocurrency transactions. Japan, Australia, the United States, Latin American, and European countries fall on this list. All these countries have some degree of regulations for cryptocurrency transactions. Saying that there are no regulations in the crypto space is a misconception.
In the United States, there is a wave of regulatory pressure on cryptocurrency exchanges. There is a debate surrounding this-whether regulations go against the very essence of cryptocurrencies or not. But that is the subject of another topic. For now, we can safely say that more regulations will encourage more institutional investors to venture into the market.
Some countries have put a ban on all crypto transactions. Cryptocurrency is banned in countries like China, Bangladesh, and Morocco. As we see more and more countries adopting cryptocurrency, governments might gradually start lifting bans. However, you must understand that authorities cannot really ban cryptocurrencies. That brings us to our next point.
3. Governments cannot ban cryptocurrency
Transactions in cryptocurrency can be banned, but cryptocurrency cannot be banned.
How can anyone ban mathematics and computer codes?
Transferring crypto from one wallet to another is like transferring images from one smartphone to another. Think of it like this: you can also take those images in a flash drive and give it to someone.
Cryptocurrencies can only be banned once authorities start classifying them as assets, securities, commodities, or currencies. Even then, a complete ban on crypto is impossible.
Cryptocurrency works on a decentralized agreement. As long as one person is willing to sell and another is willing to buy, there is no way to ban cryptocurrency.
By banning cryptocurrencies, governments effectively make trading in crypto difficult. Since most people use crypto exchange platforms to invest, a ban on these platforms will create problems for investors.
If you have been away from cryptocurrency in fear of bans and deregulations, it is time to reconsider. Businesses around the world are engaging actively in crypto. Fintech (Financial Technology) is among the fastest-growing sectors in the world. A major share of this growth is because of heavy transactions in cryptocurrency. Businesses, especially tech-driven firms, are heavily missing out by being outside the crypto space.
4. Cryptocurrency is not a fad
If cryptocurrencies were a fad, we wouldn’t be talking about it now. Countries wouldn’t go as far as banning a fad. People who think cryptocurrency is a fad are either ignorant or unwilling to see into the future.
Let’s take an example to show why cryptocurrency does not qualify as a fad. Countries like Japan, China, and Sweden are planning to roll out their official digital currencies. The Bahamas already has its own digital currency.
Fear of competition from private digital currencies is one of the main reasons driving governments around the world to create their own digital currencies. If cryptocurrency was a fad, speculations like these won’t come up in the first place.
We are seeing a worldwide trend of more businesses accepting payment in Bitcoins. Microsoft and PayPal are just two of the many companies that now accept payments in Bitcoin. As the technology matures, more businesses will start adopting cryptocurrencies.
Now that you are certain about the legitimacy of crypto, it is time you start investing. The longer you wait, the more you will miss out. Platforms like Moonpay let you buy and sell crypto from an easy-to-use, intuitive interface. Investing in crypto is now as simple as online shopping.
5. Anyone can trade in cryptocurrency
There is a pervasive misconception that crypto is only for people with high proficiency in technology or finances. Nothing could be further from the truth.
Crypto was an advanced financial sector when it first came up. After more than a decade since the launch of Bitcoin, it is now accessible for everyone. Cryptocurrency exchange platforms are the go-to option for most regular investors. If you have a smartphone and money to invest, you can also trade in crypto.
You can compare investing in crypto to driving a car. When you are driving a car, you do not necessarily need to know how the mechanics of the car works. There are mechanics and engineers for that. You only need to know how to drive and get from point A to point B. Similarly, all you need to understand in crypto is when to buy and when to sell. It is very similar to any other investment option.
A regular crypto investor is not supposed to develop Blockchain solutions or work on complex coding problems. Staying updated about developments around the world and keeping an eye on market trends is enough.
Now you can access almost all cryptocurrency exchange platforms from a personal computer or smartphone. You can also use over-the-counter or otc crypto exchange platform. The interfaces are easier than ever and payments are very secure. With a choice of exchange platforms, you can choose whatever suits you the best. Anyone, on an individual or commercial level, can reap the benefits of cryptocurrencies.
Conclusion
Conventional (fiat) money is still confusing to many people, though it is hundreds of years old. If we put cryptocurrency in that context, it is just over a decade old. No wonder so many confusions and misunderstandings abound.
Within a short time, it has become clear that cryptocurrency is here to stay. People will have different opinions about it, but the fact won’t change. Businesses are showing a growing interest in crypto. From small businesses to tech giants, everyone is eager to enter the crypto space.
For tech-driven companies, the adoption of cryptocurrency is now just a matter of time. The tech space is the hotbed of crypto-related innovations. Tech giants already realize it, and smaller firms are now following suit.
Cryptocurrency will have a huge impact on money as we know it, and the quicker you understand it the better for you.
Author bio
Atreyee Chowdhury works full-time as an Instructional Designer and is passionate about writing. She has helped many small and medium-scale businesses achieve their content marketing goals with her carefully crafted and compelling content. She lives in Bangalore, India with her husband and parents. She loves to read, experiment with different cuisines, travel, and explore the latest content marketing and L&D trends in her free time. You can reach her on Linkedin or write to her at atreyee.c@gmail.com for any content writing/marketing requirements.
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