The truth about 3 common crypto myths

There are a lot of things people repeat that are myths about crypto. But sometimes it’s hard to know what’s a myth and what’s not. Part of the reason, I believe, is because crypto has been difficult for people to understand as a new technology. I remember wanting to invest in Ethereum when it was first coming on the scene, so I logged online to read about it. 

At the time, Reddit and other message boards were the few accessible places to find current and accurate information. The problem back then was that crypto was still just a bunch of individuals arguing about their beliefs about what crypto should be. It was hard to find definitive, accurate information. But that’s not the case today. There are many sources of crypto information and therefore, myths are easier to dispel. Here are three common myths about crypto.

“It’s anonymous”

While the goal of Bitcoin was always to increase privacy and security, it’s not completely anonymous or untraceable. In fact, the way blockchain works makes transactions even more transparent than any kind of money transfer involving trust because there’s always a public record. 

It’s more accurate information that crypto, and specifically Bitcoin, is pseudonymous. Meaning, wallet addresses are not always traceable to a specific person’s identity, but transactions are always tied to a wallet address.

“It doesn’t have real value”

This is a myth I hear from almost every single person I talk to about crypto. It can take a big zoom out to see how a small piece of data can have value the way gold, or even dollars, have in people’s minds. But then—there’s your answer. Gold and dollars have value in people’s minds.

Money, a medium of exchange, doesn’t have intrinsic value. It’s simply a way to reduce trade friction. Crypto is the same thing! It only takes a collective agreement to place that value responsibility on crypto as money. Looking at the market cap of Bitcoin, it seems like we’re getting there pretty fast. Plus, proof-of-work cryptos like Bitcoin actually cost real world resources to create, so, at the very least, they hold the value of the work done to create them.

“Mining is bad for the environment”

Crypto uses a lot of computing power. That’s true. But whether it uses more energy than any other useful technology is debatable. There are long discussions about how crypto mining is not the energy boogie man it’s made out to be. If you don’t want to get into the technicalities, however, suffice to say that crypto mining uses much less energy to run a totally new financial system than banks use to run their branches and ATMS.

There’s also an emerging idea that power grids, like in Texas, can be very destabilized when supply and demand are not in equilibrium. Excess energy supply can even create negative energy prices—this is part of why gas flaring is used to burn excess supply. Crypto mining is a very flexible energy customer. It can turn off and on instantaneously, smoothing out the supply and demand imbalances.

Conclusion

There are a lot of myths about crypto floating around out there. Some of them are true, some of them aren’t. But these days, it’s a lot easier to find a wealth of accurate information to decide if they’re founded or not. When you hear your friends and family repeating myths about crypto they’ve heard, find out for yourself if they’re true.