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Most Common Misconceptions about Crypto among Beginners

Digital currencies are no longer a taboo subject. They are becoming popular in all parts of the globe. However, it seems that their popularity hasn’t reached the top so far. There are many pieces of information online that you can find about cryptocurrencies. Many of them are fake, and they often confuse beginners that want to try out working with a new payment option.

When fake news becomes viral, people start to have problems with misconceptions. That is the reason why we would like to talk about the most common misconceptions about crypto among beginners. After hearing them, you may understand how powerful all digital currencies actually are. Let’s start!

Digital Currencies Are Unregulated

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It would be unfair to say that cryptocurrencies are regulated in all parts of the world. The number of countries that recognize crypto as a legit payment option is growing. Many of them like South Korea, Japan, the USA, Australia, and others established a set of laws that control the usage of digital currencies. Of course, they all have different types of demands that their citizens will have to respect.

On the other hand, some countries have completely banned digital currencies. Some of them are China, Pakistan, India, Algeria, etc. Because of these countries, many beginners believe that digital currencies are unregulated everywhere. However, as you see, that is far away from the truth, and there are many proves that the situation in the world will positively change. Many countries are preparing a set of laws that will allow people to use crypto without breaking the law.

You Don’t Have to Pay Taxes on Crypto Income

Just like in the previous case, some countries allow people not to pay the tax on crypto income. Some of them are Denmark, The Netherlands, South Korea, etc. Yet, that situation is not going to last forever. As we said, many countries are trying to adapt their law to new payment methods.

When we talk about countries that regulated crypto, the taxes are different. For instance, Australia, UK, and the USA consider crypto incomes as capital gains. On the other hand, Japan marks this type of earning as miscellaneous income. Germany probably has the most interesting type of laws. The taxes depend on the activities that a person made. For instance, it depends on whether you invested, sold, or bought the crypto.

Everything around Digital Currencies Is Anonymous

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People need to understand that anonymity and pseudonymity are not the same. Purchasing and selling digital currencies under a pseudonym is a popular method of trading. For instance, Bitcoin allows you to enjoy that type of service. However, that doesn’t mean you won’t manage to track the transaction. Many instruments will allow people to do that.

There is a good reason why tracking transactions is possible. The creators of Bitcoin want to stop money laundering with digital currencies. If they allow complete anonymity, Bitcoin and other altcoins will serve as an excellent tool for different criminal acts.

On the other hand, there are also cryptos like Dash and Monero that give a higher level of anonymity. However, that doesn’t mean you will manage to stay completely anonymous. You will always need to provide at least some personal data whenever using exchanges or anything else. Keep in mind that crypto exchanges often collaborate with the governments of countries around the world. They want to ensure everything they do is legal in that way.

Digital Currencies Will Replace Traditional Money

Here comes the most popular misconception about digital currencies of all. Many financial institutions are not satisfied with the popularity growth of digital currencies. Because of that, they often spread different conspiracy theories about the new payment option. They want to scare people with some news such as “Crypto Is Scam“, “The Money Will Lose Value”, etc.

The purpose of digital currencies is not to replace the money. Their creators only wanted to make things easier for people that are making international transactions. Thanks to the digital currencies and technology they are using, everything is easier and quicker now.

It is correct that they are slowly taking over them because of their popularity. Websites like explained that properly. They analyzed the reasons why Bitcoin is preferred over fiat currencies and why exactly people should use it. We recommend you check that analysis after reading this article.

Digital Currencies Are Confusing and Complex

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This misconception deserves in-depth analysis. Transferring crypto from one wallet to another is too simple. You can complete the entire process with a couple of clicks. The same rule counts when we talk about exchanges. You just need to select the simplest crypto exchange and wallet, and everything will be clear to you. The entire process is almost the same as the one you use when transferring fiat money.

On the other hand, crypto trading and investing are challenging. You will have to improve your knowledge and skills before starting the journey. However, that is not something that should scare you. Every success requires hard work, dedication, and patience. Because of that, read articles like this, connect with other crypto investors/traders, and try to improve your knowledge every single day.

Cryptos Are Risky

Yes and no – both answers to these questions are correct. Every investment you made comes with some level of risk. However, the misconception people have is related to price changes that all digital currencies experienced. They all have a turbulent history with many ups and downs.

However, don’t all industries experience something like that? A good example of that is pandemic. Tourism, for instance, struggles to survive in the last year and a half. Before the pandemic, no one from that business field imagined things will become challenging like today. Fortunately, things are slowly getting back to normal, and tourism will potentially manage to survive. Because of that, those ups and downs should not scare you at all.

Final Thought

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These six misconceptions are the most common ones among beginners. People do not feel comfortable investing their money when the crypto industry looks uncertain. However, uncertainty is part of every business field. You only need to work on your knowledge and skills and find the most appropriate crypto for your needs. Sooner or later, you will manage to predict certain changes in the crypto market. That ability will help you reach many successes and avoid all the potential losses.

About Suzan Vega