Busting the top myths about cryptocurrency

There has been a lot of talk about cryptocurrency amongst economists, financial advisors, experts, and sometimes conspiracy theorists too. The facts about this digital boon are floating about the internet mixed with some amount of fiction. Rumors have a grain of truth in them but when the fictitious component gets magnified, a new false truth emerges. There are many such myths often seen or heard online and if you are looking to invest in cryptocurrency it is imperative to weed out false information. 

One of the ways you can ensure your information is genuine, is to evaluate the source. If the source is as trustworthy as the exchange platform CoinSwitch, then you have nothing to worry about. CoinSwitch is one of the most robust exchange platforms in the country. One of the easiest ways to trade crypto, it has all the tools at your disposal you will need to make good proper choices. Giving in to myths can not only take away opportunities from you to make a profit but also make you lose your investment! It is wise to stay clear of social media and treat it as the sole source of information. Official websites, financial institutions, and financial newspapers are some sources that can be ratified and considered safe. Keep reading if you want to know which parts of cryptocurrency are made up. 

Myths about cryptocurrency

  1. You don’t have to pay taxes on cryptocurrency – This is untrue. According to the government, you are required to divulge any and all digital assets you may have. Although there is a tax structure being proposed and nothing is finalized, there is a good chance you may have to pay up to 30% tax on the profits that you have earned via crypto. The laws for long-term and short-term investment may vary and newer circumstances might give birth to modified laws. Even though there are no banks involved, you are still required to pay taxes on the cryptocurrency profits. 
  2. Cryptocurrency is not real money – If FIAT currency is to be considered “real money” then it may be worth noting that cryptocurrency is not the same as FIAT currency but it definitely has value. For example, the Bitcoin price in India at the beginning of February 2022 is 28,46,279 rupees. That means if you have to buy or you decide to sell 1 Bitcoin, then that is the amount you will spend or earn. Even though digital currency is not tangible, it still has value. The value may drop or go higher depending on the nature of the market. 
  3. Cryptocurrency is illegal – Thankfully, not yet, and hopefully, never. India took a little while to get the infrastructure required to be a part of the global paradigm shift. The volume of trade in India has gone up exponentially over the past couple of years. The lack of regulatory authority often breeds confusion and crypto is banned in a few countries but cryptocurrency is legal in India. 
  4. Cryptocurrency can be stolen from you by hackers – Cryptocurrency is vulnerable to theft if you have some and leave it exposed. As soon as you buy or mine cryptocurrency, it is recommended to put it safely in a wallet. Cold wallets are preferred as hot wallets can be connected to the net and can be hacked more easily. It is recommended not to leave your crypto on the exchange platform once you have made the trade. 
  5. Blockchain is a database – Blockchain only contains the code of the transaction that took place and nothing more. It cannot store files and is more like a ledger that ensures transactions are not repeated, they are safe, and they are transparent. 
  6. Cryptocurrencies cannot be used for payment – Cryptocurrency is already being used for payment in many parts of the world. It depends entirely upon the infrastructure that is available with the merchant. There are a handful of businesses that accept cryptocurrency as payment in India as well. There has been some debate amongst experts regarding the viability of crypto being used as a currency given that the value of crypto keeps changing. However, smaller companies that are looking to reinvest their gains do not mind taking the risk. 
  7. There is one big blockchain – This is far from the truth. A blockchain is essentially a code written by a person and the purposes and uses of the blockchain vary. Blockchain refers to the technology that caters to various problems and provides solutions. For example, the blockchain that supports the Shiba Inu coin differs from the blockchain that supports Bitcoin. 
  8. Cryptocurrency is used for unlawful activities – There have been instances in the past when an investigation revealed the use of cryptocurrency for the facilitation of various illegal practices. However, India has laws in place that prevent such things from happening. Every exchange platform in India is required to have a strict KYC policy to ensure that while forming an account itself, the identity and intention of the person are being verified. 

These myths can harm the perception of potential investors. That is why it is important to tread carefully while accepting and believing any information you may come across. 

 

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