Common myths about crypto debunked
Though the first decentralised cryptocurrency was created in 2009, it was the unprecedented ‘bitcoin boom’ of 2017 that skyrocketed crypto into public consciousness writes Rob Wilson, CEO of Incent and creator of Australia’s first cryptocurrency.
Bitcoin, the blockchain and cryptocurrencies entered mainstream media with a bang; for a while being the ‘It girl’, the most clickable term on the internet and the buzzword you would drop into conversation to let people know you were in the know. However, while content surrounding these terms proliferated, crypto remained deeply misunderstood.
The initial virality of cryptocurrency may have faded, but the myths and confusion surrounding it remain extensive.
Cryptocurrency and blockchain are one and the same
Most likely due to the ties between the two, combined with the prevalence and popularity of Bitcoin, many people confuse crypto and blockchain. Cryptocurrency is an internet-based medium of exchange, with its decentralised nature the most important characteristic to note. It is not tied to any authority and theoretically, that characteristic protects it from traditional control by government or authorities. In contrast, blockchain is essentially a database, a system for storing and finding information. It’s a technology that’s being used by everyone from Amazon and Mastercard to ING and Nestle – definitely not limited to crypto-based companies.
The link between the two? Cryptocurrencies use the blockchain. It’s what allows them to be transparent, decentralised and fixed – the key properties that make them so powerful.
Cryptocurrency is dirty money, primarily used for illegal activity
It is undeniable that cryptocurrency has been and will continue to be used for criminal activity. The anonymity that it provides as well as its decentralised nature makes it an attractive option to those wanting to use it for wrongdoing, whether that be drug sales or money laundering. However, the assumption that cryptocurrency makes illegal activity easier or that it is used more in illegal activity than the US dollar is fundamentally incorrect. After all, money laundering and the drug trade have been around for centuries, well before the first crypto was brought into the market.
As cryptocurrency utilises the blockchain, it retains one of the key features of blockchain technology: transparency. Every transaction is recorded and is visible to everyone. In addition, every bitcoin transaction is tied to a user with a username. While it may be unclear who is behind that username, their activity is tied to that collection of letters and it is trackable. As people start to understand that transparency, crypto becomes a far less attractive option; perhaps that’s why US DEA report that use of bitcoin for criminal activity has plunged over the past five years.
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