The total market cap of cryptocurrencies sits at just about $661 billion. People are excited about the market and the potential, but most people don’t understand crypto or blockchain. And because it’s not yet commonly understood or widely used, there’s much misinformation floating around.
This misinformation ranges from the fear that crypto is a big Ponzi scheme to a belief that it will eventually fade away. So, what’s true? In her TED Talk, former federal prosecutor Kathryn Haun breaks down the top 3 myths surrounding crypto.
We’ve broken it down below to help dispel the myths surrounding crypto.
Crypto is synonymous with cryptocurrency, but the fact is, we do a lot more with crypto than buy and sell goods and services. The blockchain is a shared, immutable database. It creates a single, automated record that everyone with access can review. This makes it extremely valuable for maintaining information and transaction records. It’s secure, transparent, and self-managed.
While we once needed a third party to manage transactions between strangers, for instance, in online marketplaces or banks, today, the blockchain can do that. The blockchain can maintain records between companies, track shipments, verify the origin of goods (like diamonds and produce), and more. Banks can use the blockchain to create and execute smart contracts, to verify users’ identities and maintain KYC laws, and to prevent theft and money laundering.
Yes, Bitcoin incentivizes users on the blockchain, but the underlying technology is an incredible resource that will very likely be a staple in most businesses in the coming decade.
How many times have you thought (or heard someone say) that crypto is just a big bubble waiting to burst? It’s a common belief that pervades crypto markets. But in fact, there are a variety of uses for crypto that have nothing to do with speculation.
Hyperinflation: When traditional currency and banks no longer serve their populations, cryptocurrency can step in as a reliable alternative. This is already happening in places like Greece, Venezuela, Brazil, and Turkey, where currencies have hit inflation rates over 1,000%, and citizens are scrambling to save their pensions and savings accounts. It’s common for residents of these countries (and others around the world) to pull their money out of banks and put them into crypto as a form of insurance.
Unbanking: Two billion people in the world are unbanked. That means that our current global banking systems leave 2 billion people out in the cold - unable to accept payment, invest, or contribute to GDP. Bitcoin and other cryptocurrencies allow this previously neglected market to access cash and contribute to local economies with just a cheap cell phone.
International Transfers/Money Wires: Every year, immigrants and ex-pats send their hard-earned money home. Just between the U.S. and Mexico, people send $24 billion annually. The process is slow and expensive since every intermediary takes an average of 7.5% of the total. In all, we’re spending about $30 billion in fees. Crypto markets have allowed people in 155 countries to escape these exorbitant fees and send all of their money to their loved ones.
One of the things that made crypto famous was the discovery of the Silk Road – a blockchain-based platform for all kinds of illegal goods and services. Users and transactions were all crypto-based and anonymous. In fact, in 2012, up to 40% of crypto users were using the platform for illegal activities. This really shouldn’t be surprising since criminals always flock to new technologies seeking ways to exploit their benefits. When the internet was in its infancy, it was a popular place for criminals, including pornographers, identity thieves, and scammers. And while these criminals still exist, the internet is also an invaluable resource that has done far more good than harm. The same is true of crypto. While criminals may have been the “beta testers” of the platform, they currently represent only 1% of crypto users.
When a U.S. Federal agent attempted to extort Silk Road founder Ross Ulbricht, the FBI was able to trace his Bitcoin transactions back to his front door. Even in its infancy, when Bitcoin was lauded for its anonymity, it was always transparent.
The Bottom Line: Crypto is complicated. With complex new technology, it’s easy to cling to the parts with the most press or that are easiest to understand. Unfortunately for crypto, those things are illegal activities and speculation. But when we look more closely, we see a whole emerging world with unlimited potential applications in the real world - from improving systems and business practice.s to directly improving the lives and well-being of billions of people around the world.
Crypto is not a flash in the pan. It’s not speculative. And it’s about a heck of a lot more than Bitcoin.
To learn more about crypto and the blockchain, and how these technologies are opening up new options for investment, contact us today at firstname.lastname@example.org