Cryptocurrencies mean digital cash that is not controlled by any bank and used for payment and trading.” People are hesitant to invest in Bitcoin System trading bot because they are new territory in certain nations and appear to be a concept that is poorly understood. It is because it is a very newly invented thing. And, for that reason, many myths are developed around cryptocurrency. Here is a collection of cryptocurrency myths that have been dispelled:
- Bitcoin Is Not Taxable
Indeed, neither a central expert nor any banks are playing any role in bitcoin circulation in its network. However, it is still possible that the virtual currency will come under taxation. You pay taxes like any other transaction once you sell it or get paid in cryptocurrencies.
In some nations, if you trade cryptocurrencies and make a profit, and that profit is greater than $1,000, you must pay a 30 percent profit tax. You will pay 20% tax on the profit for a long-term gain, where your asset must last for at least two years.
- No connection exists between the crypto’s price with real money
Since cryptocurrencies have no physical appearance, this is possibly the largest myth that is created. Cryptocurrency traders have supported the system since 2008 because they trust its intrinsic value. You need fiat currency to buy cryptos and the value of the amount you are willing to buy is determined by the ratio with money. Cryptocurrencies are here to stay as long as there are people who appreciate and believe in their value.
- These Digital Money Methods Are Illegal
Despite being outlawed in Bolivia, Russia, Algeria, Ecuador, and Trinidad, cryptocurrencies are now recognized as legal tender in the EU, the G7, and the USA. Former Finance Minister of several nations, Mr. Arun Jaitley, noted in the Budget 2018–19 that Blockchain technology would be investigated to support digital and secure transactions. In other nations, bitcoin transactions are legal and quite successful.
- Cryptocurrencies are only used for Illegal Activities
Though certain criminal cases do record the usage of bitcoin to obtain money these are personal choices. But, the network bitcoin is not illegal at all. The Silk Road Raid incident in 2013 revealed the usage of millions of dollars, worth of Bitcoin for drug and human trafficking, yet bitcoin is still unregulated by anyone. Although several nations have mandatory KYC (Know Your Customer) protocols in place for dealing in cryptocurrencies to decrease the likelihood of any unlawful use of the digital currency.
- Hacking Cryptocurrencies Is Simple
Cryptocurrencies are developed using strong protective and security measures like encryption and decryption, hashing, and signing methods. So, it is not very easy to scam on it. The method to protect your wallet and enable secure transactions is to increase the security of wallets that facilitate bitcoin trading.
- Only one large blockchain is currently operational
It isn’t, not at all. Numerous blockchains exist. Blockchain is merely a technology that addresses various issues; there are open-source or closed-source blockchains, private or public versions, etc. While some blockchains support Bitcoin, others might support Ethereum, Ripple, XcelToken Plus, and other cryptocurrencies.
- Blockchain Is A Database Similar To The Cloud
It’s crucial to remember that blockchain functions similarly to a ledger by simply recording transactions. It is not only storing the data like a cloud but also spreading it evenly and making the network. This whole ledger supports cryptocurrencies and guarantees that transactions are secure, unique, and transparent.
- Cryptocurrencies Cannot Be Used to Make Payments
In 2008, cryptocurrency first appeared and they are already being accepted as payments. Expedia, Dell, Microsoft, Fiverr, and many more companies are there on the list.
- Cryptocurrencies and their transactions are anonymous and untraceable.
The blockchain in crypto keeps a record of everything. Although there is some anonymity, it is not difficult to identify users and their information in some circumstances. There is user anonymity, but it’s not completely guaranteed, just like on any other platform.
- Blockchains Are Not Used in Business
The fact that Mr. Arun Jaitley, an ex-finance minister, underlined the necessity of researching blockchain to support digital transactions speaks much about its integrity. They might even be the next big thing in the financial industry. Japan has previously established a self-regulatory organization and given them legal status. Blockchains are the ideal database because they securely store data, maintain track of transactions, keep records permanently, and are impossible to hack.
After discussing all these facts, before making a choice, we advise anyone considering buying Bitcoin or other cryptocurrencies to thoroughly consider the benefits and drawbacks of investing in them and to understand how they are used and taxed in various jurisdictions.