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Top 5 Myths Around Blockchain and Crypto
Crypto is more popular than it has ever been. We’ve seen it in the news. We’ve seen “crypto accepted here” signs being put up in many store windows and websites. We’ve seen it taking over social media. Of course, since it’s a new technology, there are many misconceptions around it.
These misconceptions about Crypto come from a place where precise and accessible information is missing, and can easily be understood with some simple research.
This article will clarify some of these common misconceptions for you. Hopefully, in the process, we will help to provide a more positive understanding of Cryptocurrencies and the incredible impacts that I can have on society.
CASE 1: Crypto is Used for Illegal Substances
Silk Road, and illegal drug market on the dark web, was probably the first time that many people heard about Crypto. A couple of years later, the FBI took down the site and arrested its founder, Ross Ulbricht.
Truth is, the days of the Silk Road are long gone. Yes, using Crypto provides an innovative level of anonymity for its users. However, regulations have been put in place to prevent Crypto from being used by potential criminals. Such regulations are seen on popular Crypto exchanges, which require users to verify their identity with the exchange operators before being able to access the exchange. Yet, people still link Crypto with drugs or money laundering because of its use on Silk Road. What people do not know is that even if some criminals have used Crypto for their crimes, they still tend to prefer cold hard cash for their illicit activities.
CASE 2: Crypto Is Illegal
Another misconception that people tend to believe is that Crypto is illegal. This could not be further from the truth.
Yes, cryptos are anonymous to a certain degree, but that does not mean they are illegal. Some of the biggest companies in the world accept Crypto. We are at a time where companies such as Microsoft are investing heavily in blockchain technologies, as well as ways to connect with their customers through cryptocurrencies. Crypto is currently deemed legal in North America and most European states. However, it is crucial to do your research before engaging in Crypto, as many countries have varying regulations.
CASE 3: You Can Use Crypto To Evade Tax
People usually think that if they have any crypto, they should not report it on their taxes. This is not only a mistake, but it is also a crime.
The IRS considers these virtual currencies as property for tax purposes. And it has been like that since 2014. In short, if you buy, sell, or exchange crypto to generate a profit, you will need to report it on your taxes. Likewise, if you mine Crypto, receive it as a payment, or an airdrop, you should report it as ordinary income.
CASE 4: “The” Blockchain
What some people do not know with blockchain technology is that it is not “the” blockchain. There is not a single blockchain; there are many.
Every day there is some sort of groundbreaking news about blockchain adoption. People talk about the blockchain changing x or y industry. Yet some people think there is only one blockchain. The truth is that there are many blockchains, and each one is different. Every industry and company will probably have a preference as to which blockchain they are adopting.
CASE 5: Blockchain Can Solve Any Problem
Marketers have found a new buzzword in blockchain. And they sell blockchain as the solution to every single problem in every industry. Once again, this is a half-truth at best.
Indeed, blockchain solves many problems. It does not solve all of them. One of the key advantages of blockchain is it provides a platform potentially devoid of corruption by a single government or central authority. This is true – it cannot be manipulated, no one can censor it, and its data is public. It sounds like a dream, but this only solves a few problems. There are far fewer places that recognize the limitations of blockchain than businesses.
In many cases, business is enacted on the foundation of trust that the consumer has in its products, brand equity, social responsibility, and a host of other reasons. These qualitative attributes cannot be simply replaced with impersonal customer experiences. Need an example? Look at how the stock market increased while unemployment rates soared during COVID. Not everything runs on logic.
To tell the truth, these misconceptions can be overcome with education. Likewise, as soon as these misconceptions are overcome, new ones will arise. Each one of these will be overcome little by little at the same pace that our technology advances.