Some crypto myths need to be quickly dismantled as they paint an unnecessarily vague and even totally false picture of this emerging industry. During the serious adoption by more and more traditional financial institutions and the growing influx of retailers, you would think that most of the myths have gone with the wind. Not yet, but soon, international Forex broker OctaFX promises.
Bitcoin pumped the vertical line towards $ 68,700 on November 10, 2021, closing that day with a new all-time high. The entire following month was a tour de force involving the price falling to nearly $ 46,500 on December 4, a correction of over 32%, dragging the altcoin market with it. Still, a bearish sentiment has yet to be announced, and most industry watchers are instead seeing the peculiarities of a larger bull market unfold, projecting its blockchain innovation across the financial market.
Let’s get started.
“Bitcoin has no intrinsic value”
While this prejudice persists much less than it did a few years ago, many critics, such as prominent gold maximalists, classic equity traders and centralized fiat currency enthusiasts, miss no opportunity to spread the word. same unproven claim that bitcoin has ‘no intrinsic value.’ It has become something of a hybrid between an unfulfilled prophecy, a running joke, and a mantra to justify its own contempt. Most of these complaints revolve around the supposed ‘double-spending’ problem of the bitcoin network, which no one has ever demonstrated. After more than a decade of active and exponential growth and adoption of bitcoin and its ecosystem, fueled by a global community of developers, miners, traders and holders (or more specifically, “hodlers”), the skeptics have been wrong time and time again. again.
“Can I lose money in crypto? “
Naturally. Like losing money on the stock market or buying a shoddy car, you can always find ways to lose money in no time by trusting dubious sources. Persistence, care and caution can be remedies in cases of higher financial risk and reward.
So while bitcoin and blockchain are not, in essence, Ponzi schemes, there are undoubtedly individual projects that are tarnishing crypto’s good reputation. They act maliciously, promising partnerships that never existed or throwing tokens that have nothing behind them. These unfortunate events that cause people to lose money fuel rumors associating bitcoin with “a pyramid scheme.” This notion has been debunked for some time, but it is only after widespread adoption of bitcoin by more and more states, governments, private banks and celebrities that it is now considered a reserve. of legitimate and uncorrupted value in the coming âfourth industrial revolutionâ. Do your due diligence and research the companies that you invest your hard-earned money in. Therefore, it bears repeating, even at the risk of sounding boring: the comprehensive solution to this phenomenon – to minimize your risks – was and always will be education.
“Not your keys, not your crypto”
It’s true. If you hold your crypto assets on centralized crypto exchanges (like Binance, KuCoin, Huobi), your capital is not entirely under your control and is vulnerable to attack. Although in recent years these exchanges have become household names precisely for their persistent approach to the security and stability of services, hacks still occur to this day. It is generally recommended that you leave only the funds you need on centralized exchanges. Whatever you hold for the medium to long term, you should store it on an individual wallet app, with separate keys for maximum security.
In decentralized finance (DeFi), your independence comes with total responsibility. If you make a basic mistake and lose your funds because of it, it will be on you. There are cases where this responsibility becomes divided. If the services you have used recognize shared or total fault, then you have a chance of being reimbursed for your loss, in whole or at least in part. Although these cases are rather rare.
“You never know what to expect with cryptography”
This is not entirely true and, again, depends on your knowledge. It certainly doesn’t have to be as obscure as an âunopened box of chocolatesâ. For this reason, doing fundamental analysis (FA) can go a long way. A thorough research will give you a very reliable idea of ââthe direction the project could take. Who makes up the team for the blockchain project in question? Who are the first investors and what is their background? What are the unique use cases that the project promises to deliver? Are patents involved for certain niche technologies within the blockchain? When you get the answers to these FA-related questions, you will have an infinitely better chance of making an informed, sustainable and lucrative investment decision.
Most of us also don’t know what to expect from the bitcoin creator. This elusive figure named “Satoshi Nakamoto” reportedly withdrew from the project shortly after its launch in 2008. It still raises a lot of eyebrows, though the inventors of the wheel or the email also didn’t have to. continuous impact on their creations. So, Satoshi or not, for less than 15 years, we have witnessed the rise of this technology from a toy of certain brains to an almost universally accepted (but extremely volatile) world currency with a value of over 50,000. USD.
Every market has cycles, bullish and bearish trends. If the blockchain market initiates a downtrend, traders and investors should adjust accordingly and put their emotions aside. This industry is still in its infancy compared to what’s to come. So it should come as no surprise that the market fluctuates much more than the older and more established financial processes around Gold, Brent Oil, or even Forex.
Please note, this article is by no means an exhaustive list of all the myths concerning the crypto market. But it can serve as an initial roadmap for navigating the ever-attractive world of decentralized finance.
OctaFX is a global brokerage that has been providing online trading services worldwide since 2011. It provides industry-leading trading experience to over 6.6 million trading accounts worldwide. The educational and topical content of the broker keeps growing with expert articles on all things finance. OctaFX has won over 30 awards since its inception, including the 2020 Best ECN Broker Award from World Finance and most recently the 2021 âBest Forex Broker in Asiaâ award and the 2020 âMost Transparent Brokerâ award from Global Banking & Finance Review and Forex Price, respectively. The company is known for its social and charitable activity.