The appearance of Bitcoin in 2009 revolutionized the financial sector. But unless you are familiar with the industry and love the concept of a decentralized currency, the whole idea behind it may seem puzzling. To address some of the most common misconceptions around cryptocurrencies, we have turned to Greg Rogowski, an experienced crypto enthusiast, founder, and brand owner of the Mining City platform.
Mining City provides hash power to people interested in mining cryptocurrencies without acquiring their own mining equipment. The platform is often the first contact between newcomers and the crypto world, so Greg Rogowski has become accustomed to addressing the community and clarifying their most frequent doubts.
Borrowing Greg Rogowski’s expertise, we have compiled some of the most frequent misconceptions among those who are just starting their journey with cryptocurrency.
1. I cannot touch it, so it does not exist
Throughout history, money, be it coins or banknotes, have always been a tangible asset, something people could hold in their hands. The whole concept of blocks of numbers stored in a virtual space is still hard to comprehend. So, putting savings into something like cryptocurrencies, which usually are not backed by real-world assets, may seem risky to many people.
But just because cryptocurrencies don’t take a physical form doesn’t mean they hold no value. On the contrary, they can be exchanged for euros, dollars and other currencies and used for all kinds of online transactions. In fact, they are a new category in commercial portfolios for both retail investors and big corporations. Microsoft, mobile provider AT&T, Norwegian Air and many other companies and stores accept Bitcoin payments. A lot more are in the process of adopting it.
2. It can be stolen, so it is not safe
There have been various news reports of hacks, scams and get-rich-quick pyramid schemes involving crypto. They spread fear and can jeopardize the chance for mass adoption. But the truth is, there have been more bank robberies than cryptocurrency thefts. According to FBI data, there were approximately 3,000 bank robberies in the United States in 2018 alone, while there were just over 150 instances of crypto theft that year, mainly originating in Japan.
“There are also smart solutions in place to make sure all coins are well protected. Crypto wallets used to store digital currencies come with various security features that make unauthorized access almost impossible,” says Rogowski. One of the most popular is two-factor authentication. A user initiating a transaction needs to type in a password and provide a unique code sent to his mobile device or scan a fingerprint. Developers are constantly working on improving both individual cryptocurrencies and blockchain technology that support them.
3. The technology behind it is too complicated
“The blockchain technology used by cryptocurrencies is still relatively new. It is not surprising that people don’t understand it and automatically assume it is not for them. So, even though blockchain is more secure than the traditional banking system, many are still reluctant to embrace it,” says the Mining City founder.
Blockchain is one of the most transparent and secure ways of recording data. Every transaction is timestamped and recorded into a block where it stays forever. Thanks to strong encryption techniques it cannot be deleted, reversed, or tampered with. Among other things, it prevents chargeback transactions that most credit card companies allow. And because cryptocurrency blockchains are public, it is easy to track down any transfer and check its details.
What speaks for this technology is the fact that nearly 75 percent of the Fortune 100 companies have already explored blockchain. They are implementing it in various processes, from managing a supply chain to improving the transmission of data and overseeing the manufacturing operations.
BNP Paribas bank successfully processes payments using blockchain technology. Toyota wants to use it for developing self-driving cars. Nestle, Walmart and Costco are working with IBM on a blockchain to secure a global food supply network. Others, like Volkswagen, Allianz, and Verizon are already considering the implementation of blockchain technology.
4. There is no government backing, so it is unreliable
The idea behind cryptocurrencies was to decentralize funds and give individual users more power over their money. “No control of a central governing body or a third-party system means one does not need to worry about aggressive policies, bank failures or high fees,” he argues. Cryptocurrency transfers can be made internationally within minutes but don’t depend on the exchange rates. Digital assets, like Bitcoin, are also immune to inflation or deflation.
“It is important that the peer-to-peer cryptocurrency transactions cut out the middle-man and make it easier to establish audit trails. There is less confusion over who should pay what to whom and greater accountability between the two parties involved.”
Not all cryptocurrencies are independent of the government. For example, a state-backed cryptocurrency has been in development in China since 2014. Now e-yuan transactions are tested across the country. And every year there are more crypto-friendly countries. Estonia, Japan, and Switzerland are only few of those that encourage companies dealing with cryptocurrencies to build businesses under their jurisdiction.
More national banks and financial institutions around the world have started accepting cryptocurrencies. Ally bank located in the United States allows users to link their accounts to Coinbase and buy coins with a debit card. Goldman Sachs launched an altcoin trading desk, while Wirex offers crypto-friendly business accounts.
German Fidor Bank revealed its plan to team up with Kraken exchange to establish a fully functioning altcoin bank. According to JP Morgan, Bitcoin could replace gold, as digital assets become more popular.
5. It is scary because it is hard to understand
Since not much has been done to inform people about digital currencies and blockchain technology, some are uneasy about putting their hands on something they don’t understand. Especially when it involves hard-earned money. But if some admit that they don’t know enough about cryptocurrency to get involved with it, can we blame them? After all, the fear of the unknown is in the human DNA.
“At Mining City, we work hard to raise awareness about cryptocurrencies. We adopt a community-based approach to help newbies understand what they are getting into,” explains Greg Rogowski. From informative materials to weekly seminars about crypto trends and markets, Mining City has been working with industry experts to give people the knowledge they need to make informed decisions. What is more, being part of a mining community brings about a sense of relief and support, allowing them to see beyond their fears.
“People are concerned about cryptocurrencies not because there is something wrong with them, but because they fear what they don’t understand yet. However, simply learning about all the possibilities of digital currencies might help them see the whole thing in a new light,” Greg Rogowski concludes.
