There are many myths about cryptocurrencies and they are driven as much by marketing and mythos as misinformation. With all the new crypto currencies entering the market and misinformation floating around, it can be hard to understand how they work. Here are three common myths about cryptocurrencies and the truth about them.
Buying Cryptocurrencies is Gambling
Cryptocurrencies, when bought for use, are simply a currency exchange. When you buy it hoping to get rich on it skyrocketing in value, you’re gambling just like someone using binary options as a way to put a thin veneer of legitimacy on what is otherwise online gambling.
Integrating Cryptocurrencies on Your Site Will Boost Sales
There are some instances where cryptocurrencies might help your sales, but the effect will be minor in most cases.
However, cryptocurrencies can enable international trade with people who may not be able to secure your currency for online purchases, such as selling something to someone in Venezuela or transferring money to them that would otherwise be intercepted and a large cut taken by the state. Some colleges even accept cryptocurrencies in payment for an online MLIS degree or similar.
This is why Bitcoin has been advertising itself as an alternative to traditional remittances in response to President Trump’s proposal to slap a large fee/tax on all financial transfers to Mexico. However, this doesn’t help the average website do more business unless you’re in the financial transfer business. Those working on an online MLIS program should learn about how public policy affects the value of currencies and trade to better understand the degree to which cryptocurrencies are influenced by them and in response to them.
Cryptocurrencies Must Have Intrinsic Value to Have Value
When salt, cacao beans, or grain were used as currency, they had an intrinsic value. If you didn’t trade it to someone else, you retained the option to store it or consume it yourself. Gold and silver had an ornamental value that gave them an intrinsic value beyond their use as a medium of exchange. Paper money was the first case of currency having no intrinsic value except the trust others invested in it.
Cryptocurrencies build on that same concept while reducing the risk that the value will go down because a national government will print too much paper money, devalue the currency through a single shift in the official exchange rate, or demand a “haircut” of everyone’s bank accounts to reduce what is in circulation while generating a one-time influx of state revenue. In this regard, cryptocurrencies are as reliant on trust as paper money to be used as a medium of exchange but fueled by mistrust in national governments.
Cryptocurrencies do not have an intrinsic value and while they are reliant on computers and servers for creation and tracking, humans are required to give them value. Putting cryptocurrencies on your website does not mean you’re doing anything illegal but it won’t help most websites increase sales unless you’re delisted by some other payment systems. Cryptocurrencies are not gambling unless you’re buying, selling and trading them in a misbegotten get-rich-quick scheme. For more Bitcoin myths check out our top Bitcoin myths article.