Breaking down the myths of the crypto industry

Bitcoin has been around for over a decade, blockchain technology is a little older, and cryptocurrency is gaining massive adoption across the globe. But still, the general public will often come across a concept or idea that misstates the truth about Bitcoin, the blockchain, and the overall crypto industry.

For some, this emerging technology only targets the financial sector, while many cannot tell tokens from coins.

It is such myths and misconceptions about blockchain that we debunk in this blog article.

Myths about blockchain and cryptocurrency

Here is what you need to know about the industry to dispel the false impression likely to have formed from what you heard or thought of in the course of trying to find more about the blockchain space.

Myth # 1: Cryptocurrency and Blockchain are for technology and finance people only

Bitcoin's first use case was in the financial space, but it's far from the only one. And neither is blockchain only meant for the tech-savvy.

Today, many industries and companies, family businesses, hedge funds, and individuals are into crypto and blockchain.

Apart from finance and banking, you'll find blockchain applications for:

• Fintech
• Health and pharmaceutical
• Agriculture
• Real estate
• Education
• Supply chain management
• Gaming
• Retail industry

The widespread adoption of crypto and blockchain across these sectors continues to influence the trust people are building towards the industry. Interest from JP Morgan, Square, IBM, Amazon Inc and Walmart is just one indication of how blockchain has moved from a buzzword to an industry with real value and a bright future.

Myth # 2: Digital currencies don't have value

Digital currencies are still a developing concept, and many have failed to take off or had to fold due to various reasons. But it is misleading to say they have no value.

For example, Bitcoin that now changes hands at around $29,000 is attracting Wall Street billionaires and Fortune 500 companies. Meanwhile, Ethereum ($760) is providing real value in various ways to its holders.

Today, one can buy and hold Bitcoin as a store of value- it is comparable to gold’s safe-haven status. Alternatively, one can use it for the exchange of goods and services. That's value.

Myth # 3: Cryptocurrencies aren't secure

It's a misconception to claim that, just because hackers steal cryptocurrencies, then crypto and blockchain technology is not really secure. Some major hacks have indeed happened that could point to a lack of security.

However, for the most part, all of these hacks have happened on exchanges and some forked networks. The Bitcoin blockchain is a tamper-proof network that is virtually unfeasible to hack.

The use of hash functions to record every transaction and data on the blockchain, and then broadcasting it to all network participants, only means one thing: it's practically impossible to overwrite or manipulate the records.

Proponents of cryptocurrency and how secure they can be also point to the lack of a central point of failure as an added advantage. In this case, the overall network will always be secure, even if hackers compromise some users.

And it is blockchain's security that is attracting the global community, even the U.S military, into building a cutting-edge cybersecurity platform.

Myth # 4: Digital currencies are primarily used for illicit activity

The notion that criminals are the primary users of cryptocurrencies is false. Blockchain-based networks were indeed built for transaction anonymity and a few privacy-focused coins help obfuscate user identity- all attractive to criminals.

However, research has shown that nefarious activities such as drug trafficking and money laundering are predominantly cash-oriented. And again, a growing number of law-abiding individuals use crypto for various reasons, including paying taxes, transfer value, or storing land/real estate records.

Myth #5: Tokens and coins are the same thing

False: Tokens and coins are two different concepts in blockchain terms. When talking of a coin or token cryptocurrency, the best way to separate the two is to note that coins are native to a standalone network like Bitcoin, Ethereum, and Litecoin.

A token, on the other hand, refers to any cryptocurrency built on top of another blockchain. You'll find that some do migrate to a standalone blockchain after a period of development. In any case, we have Ethereum-based (ERC-20), Tron-based or NEO-based tokens.

While developers design coins for a specific utility function, like acting as a store of value or as a payment currency, tokens usually work within a particular network's ecosystem for functions such as paying transaction fees, in-game purchases, and payouts to incentivize network participants.

A simple way to differentiate between coin and token:

• Coin - native to a standalone blockchain
• Token – built and lives on another blockchain

Myth #6: Blockchain's only application is a cryptocurrency

Again, not true. Although blockchain's popularity arose following the launch of the Bitcoin cryptocurrency, the crypto aspect is far from the only use case for the technology.

As highlighted above, there are numerous applications driven by the underlying blockchain and distributed ledger technology.

Smart contracts, securitizing data, identity protection, and record-keeping are some of the key use cases of blockchain. What this means is that we do not only have digital currencies for cross-border payments, P2P lending, or microfinance. It goes beyond that into things like health, intellectual property, ownership, equity, gaming, and much more.

For instance, we now have blockchain applications for the health sector, allowing for storage and sharing of patient's medical records without compromising on their integrity or security.

Various voter applications are now blockchain-based, guarding on issues like potential fraud during voting or counting of ballots. Elsewhere, the supply chain sector has seized on the technology to enhance tracking of goods to cut on the destabilizing aspect of counterfeit products.

Conclusion

There have been numerous myths and misconceptions about blockchain and cryptocurrencies, all potentially contributing to the misunderstanding that has enveloped the sector. However, increased adoption and sustained education programs have helped dispel most of the misleading information. The above 6 myths are some of the most common, but anyone looking to get into crypto must always endeavor to do their due diligence.