The 5 Biggest Misconceptions About Crypto
The world of crypto is complex and sometimes overwhelming. You may encounter a variety of differing arguments and opinions which can make it challenging to sort out the signal from the noise. Let’s sort out the five biggest misunderstandings when it comes to cryptocurrency.
Misconception #1: Crypto Is Always Great for Criminals
Crypto is often touted as a hideout for criminal activity. However, because crypto isn’t generally private, it’s a poor choice for concealing your financial transactions.
People might believe that crypto is the land of scammers and thieves because there are often hacks that make headlines in mainstream media. But the fact is that many of these hackers were unsuccessful in getting away with their plunder because their actions were broadcast to the world on public blockchains.
In reality, many of these hackers or criminals were unable to move their stolen funds—or were eventually caught. Blockchain networks and their transparency allows for crime to be spotted and rooted out in real time, making them a poor venue for illicit activities.
Misconception #2: Crypto Will Always Use Lots of Energy
There are different mechanisms used by blockchains to secure the network. The most common solutions are Proof of Work and Proof of Stake. Proof of Work uses complex math problems that require lots of computational power, meaning more energy is used to verify the chain.
However, Proof of Stake uses about 99% less energy than Proof of Work because users stake some of their tokens as a deposit for being a good actor in verifying transactions. There’s no complicated computation to validate the chain.