Cryptocurrency has exploded in popularity in recent years, but it’s also become a breeding ground for misunderstandings. From concerns about anonymity to worries about replacing traditional money, misconceptions about crypto can be as plentiful as the coins themselves. In this article, we’ll debunk some of the most common myths surrounding cryptocurrency, helping you understand its potential and limitations.

Myth #1: Cryptocurrency is anonymous and untraceable.

While transactions use pseudonyms, they are typically recorded on public blockchains, making them traceable. In fact, that’s one of the reasons that some industries and governments are turning to cryptocurrencies – because they create immutable ledgers.

Myth #2: Cryptocurrency has no real-world value.

Cryptocurrencies can be used for various purposes, including online payments, a hedge against inflation, and even as a store of value. Take it from Deloitte, who found in 2022 that 75% of retailers would be accepting cryptocurrency as a form of payment in two years’ time. That syncs up with what we saw in 2023 when the number of vendors accepting Bitcoin jumped up 174%. While the price of bitcoin or any cryptocurrency (and traditional currency for that matter) is of course dependent on the market and overall economic trends, it’s fair to say that cryptocurrency does have real world value.  (It certainly does today with bitcoin trading around $70,000 per coin.)

Myth #3: Cryptocurrency is only used for illegal activities.

While some criminals use crypto, it’s only 0.12 percent of the total number of transactions using cryptocurrency. Traditional cash is still more prevalent for illegal activities.

Myth #4: Cryptocurrencies are not secure.

Reputable cryptocurrencies use strong cryptography to secure transactions. Bitcoin stands above the crowd due to its Proof-of-Work infrastructure, which provides a significant hardware barrier to bad actors. However, security risks can arise from user error or exchange hacks.  Though risks are present, following basic cryptocurrency security guidelines will help keep your digital assets safe.

Myth #5: Bitcoin is the only cryptocurrency.

There are thousands of cryptocurrencies (altcoins) with different purposes and functionalities.

Myth #6: Cryptocurrencies are a guaranteed way to get rich quick.

Cryptocurrencies are highly volatile, meaning their prices can fluctuate dramatically.  Investing in them carries significant short-term risk, although some coins (such as Bitcoin and Ethereum) are proving to be solid long-term investments for those prepared to enjoy the ride.

Myth #7: Cryptocurrencies will replace traditional fiat currencies.

While cryptocurrencies may become more widely used, it’s unlikely they’ll completely replace traditional currencies in the near future. With that said, countries that are experiencing particularly extreme inflation are seeing their citizens turn to cryptocurrency as a means to preserve the assets they have left.

Myth #8: Cryptocurrencies are bad for the environment.

The energy consumption of some blockchains is a concern, but there are efforts to make them more sustainable. Ethereum, for example, switched to a Proof of Stake model that requires much less energy to function, and the popular Solana coin was developed specifically with low energy use in mind.