Crypto Myths Debunked! The Myth of Crypto Being Unsafe
In the first part of the series on Crypto Myths, we debunked the misconception that cryptocurrencies are only used for illegal activity. Now, we turn our attention to another common myth surrounding the world of cryptocurrencies.
While it is true that there have been instances of hacking and theft involving cryptocurrencies, the same can be said for any form of digital payment or storage.
The reality is that crypto can be just as safe, if not safer, than traditional financial systems as long as proper security measures are taken.
Myth #1: The Crypto Is Anonymous, Which Makes It Easier For Criminals To Use It For Illegal Activities.
While certain cryptocurrencies, such as Bitcoin, are known for their pseudonymous nature, this does not automatically mean they are being used for illegal activities. Many legitimate businesses and individuals use cryptocurrencies for various purposes, from buying goods and services to investing.
Moreover, the notion that crypto is completely anonymous is not entirely accurate. Many exchanges require users to go through KYC (Know Your Customer) and AML (Anti-Money Laundering) verification processes that help prevent illegal activity. Additionally, blockchain analysis tools can be used to track and monitor transactions on the blockchain, making it harder for criminals to hide their activities.
Myth #2: Crypto Wallets Are Vulnerable To Hacking.
While it is true that crypto wallets have been hacked in the past, the same can be said for traditional bank accounts and credit cards. The key to keeping crypto wallets safe is to choose a reputable wallet provider and to use proper security practices, such as two-factor authentication and strong passwords.
Additionally, many hardware wallets, which store cryptocurrency offline, offer an extra layer of protection against hacking.
Myth #3: Crypto Is A Purely Digital Asset That Can Be Easily Stolen Or Lost.
While crypto is certainly a digital asset, it is not the case that it can be easily stolen or lost. The fact that cryptocurrencies operate on a decentralized blockchain means that they are not tied to any one device or location.
This makes them much harder to steal or lose than traditional physical assets, such as cash or gold. Users can back up their wallet information and store it in multiple locations to ensure they can always access their funds.
Myth #4: Cryptocurrencies Are Too Volatile For Mainstream Use.
While it is true that cryptocurrencies are often subject to high levels of price volatility, this does not necessarily mean that they are unsuitable for mainstream adoption.
Many businesses and individuals already use cryptocurrencies, from buying goods and services to investing.
Moreover, stablecoins, cryptocurrencies pegged to fiat currencies or other stable assets, offer a more stable option for those hesitant about crypto’s volatility.
In his recent tweet, CZ Binance talked about Crypto myths;
A myth about cryptocurrencies being inherently dangerous is untrue, despite the risks associated with them. By taking proper security measures and using reputable exchanges and wallet providers, individuals and businesses can safely and securely use cryptocurrencies for various purposes.
How Prevalent Is Crime On Blockchain?
Here are some numbers that make it hard to put things into perspective. According to the 2022 Crypto Crime Report from blockchain analytics firm Chainalysis, criminal activity for all crypto transactions was just 0.15% in 2021, up from his reported 0.62% in 2020.
Yes, illegal crypto addresses received $14 billion last year. However, this is trivial compared to fiat currency, where about $2 trillion (or about 5% of global GDP) is laundered each year through the traditional financial system.
Transparency As A Feature
A public blockchain ledger monitors verify and record the complete history of each transaction. Every transaction leaves a permanent immutable trail of records, making it easy for anyone to trace the origin and movement of funds.
Law enforcement agencies fighting financial crime around the world are already learning how to leverage the traceability of digital assets when tracking illicitly obtained funds.
Blockchain also enables money laundering risk analysis and reporting mechanisms, monitoring entry and exit points as well as system-wide analysis.
Illegal gains in fiat currency can be hidden through the shuffling of funds, bill fraud, or offshore bank accounts, but the blockchain can be checked by anyone at any time using Block Explorer.
Everything Caught Up With Compliance
While it has taken traditional financial institutions more than a century to establish and refine their regulatory compliance processes and procedures, the fledgling cryptocurrency industry has been around for just a decade.
In the early days of its existence, there were certainly gaps when it came to standard financial compliance practices such as sanctions, anti-money laundering, and identity verification systems.
We insist on robust Know Your Customer (KYC) and Anti-Money Laundering (AML) systems and protocols to closely monitor transactions and report to relevant authorities if necessary.
Such safeguards have become an integral part of any reputable digital asset platform. Cryptocurrency exchanges use the same top-notch tools as major financial institutions to implement anti-money measures in various jurisdictions. Ensure compliance with laundering and sanctions regulations.
Main Belongings
Skeptics argue that the cryptocurrency and blockchain ecosystems are anonymous, unreliable, and widely used by criminals for malicious purposes, making them safe or unsafe for the general public. It is often wrong.
- Blockchain transparency is the feature, not a bug. The new financial system is under scrutiny by users, regulators, and law enforcement agencies worldwide. In many ways, it’s even tougher than the traditional financial system.
- Trusted cryptographic services and platforms already have levels of security and anti-money laundering, customer verification, and transaction monitoring that rival (and sometimes exceed) traditional banks and other financial institutions.
- Blockchain is still a relatively new technology, so there are many lies and misconceptions about cryptocurrencies. Look at some of his FUD (Fear, Uncertainty, Doubt) stories of the most popular cryptocurrencies to separate fact from fiction.
Crypto-deniers argue that the digital asset ecosystem is neither safe nor secure for humans because it is anonymous, unreliable, and widely used by criminals.
According to the 2022 Crypto Crime Report from blockchain analytics firm Chainalysis, criminal activity for all cryptocurrency transactions was just 0.15% in 2021, up from a reported 0.62% in 2020. Yes, Illegal Crypto Addresses Received $14 Billion Last Year. However, this is trivial compared to fiat currency, where about $2 trillion (or about 5% of global GDP) is laundered yearly through the traditional financial system.