Is Crypto The Future? Or Is Lack of Understanding Holding Back The Cryptocurrency Industry? was written for Playlouder by a contributing author. Please note that contributing opinions are that of the author. They are not always in strict alignment with my own opinions. –Joe.
It’s 2023, and digital currencies have long ceased to be a novelty or a curiosity. The dramatic spikes in Bitcoin price registered over time have brought cryptocurrencies into the limelight as a promising high-return investment option and a viable alternate payment method.
These days, crypto trading and investing are accessible to anyone with a computer or mobile device and a good internet connection. By the latest count, there are over 425 million cryptocurrency users worldwide, according to Statista, and the adoption rate continues to increase.
The trend is backed by the growing number of forward-thinking businesses and organizations that accept crypto payments for their products and services. And let’s not forget that governments around the world have also warmed up to digital assets in recent years, with some countries going as far as approving Bitcoin as a legal tender.
Crypto is now a noteworthy player in the global financial scene, and it’s not going anywhere. One would think that people would know everything there is to know about cryptocurrency and its underpinning technology by now, but reality shows us otherwise.
Despite crypto’s staggering rise to fame and its rapid progress toward mainstream adoption, there are many crypto-related aspects that people either disregard or misunderstand.
Public Understanding Of Cryptocurrency
Nowadays, it’s nearly impossible to ignore the crypto phenomenon that has swept across the world. Even if you’re not interested in digital currencies and have never engaged in crypto trading or investing, you have at least heard about this innovative asset class.
This is where most people's knowledge and understanding of crypto stops. According to a study published by cryptoliteracy.org, comprehension of cryptocurrency fundamentals is low in 2022. conducted on 1,000 people from the U.S., Mexico, and Brazil reveals that 91% of the survey respondents needed help understanding basic crypto concepts.
According to the survey, 98% of respondents need help understanding basic crypto concepts. For instance, 90% were unaware that Bitcoin has a supply cap of 21 million coins, a defining aspect of the project and one of its main selling points. 21% believed that Bitcoin supply was unlimited, and 62% could not guess the supply limit. The factors that influence Bitcoin’s price movements also remained a mystery for 60% of respondents, and most were equally oblivious about the existence of stablecoins and their function.
The Crypto Literacy Survey conducted by YouGov also highlighted the low levels of crypto education and was included in a CryptoLiteracy.org report. Of all the participants who had to answer the 17 crypto-related questions included in the survey, 98% scored less than 60%. Both studies indicate that people’s understanding of crypto is somewhat limited and superficial.
At the same time, it’s evident that digital currencies are gaining ground worldwide. There are 33 new cryptocurrencies created every week, and governments’ interest in developing regulatory frameworks for crypto gives us strong reasons to believe that these assets might come to play an essential role in the future of finance.
The sheer number of crypto projects that have emerged on the market in recent years and the intricate nature of the technology that backs them up might explain why the population doesn’t have a solid grasp on crypto concepts.
Unfortunately, the lack of adequate education poses a barrier to crypto adoption. It perpetuates many myths and misconceptions about digital currencies that negatively impact the industry’s growth.
Are Crypto Transactions Anonymous?
One of the most widespread myths is that crypto is anonymous and untraceable. It would be easy to debunk this fallacy if one would only take a peek behind the curtain and delve deeper into crypto’s use of blockchain technology.
Crypto transactions take place on the blockchain, which serves as a public decentralized ledger for storing information across a network of computers. This means that transaction history is available to anyone who uses public blockchains.
Given that transactions are pseudonymous, one might be unable to determine who is behind them. However, users need crypto addresses to carry out these transactions, and they can be traced and linked to personally identifying information.
In other words, crypto ensures higher levels of privacy but cannot guarantee anonymity.
Is Crypto Largely Used For Crime?
Another common misconception is that crypto is strongly linked to illegal activities. This may have been true in the industry's early days when criminals and ill-intended entities rushed to use this novel technology to conduct illicit activities.
However, things have changed a lot over the years. Although crypto can still be used for criminal purposes, statistics reveal that Only 0.24% of all cryptocurrency transactions in 2022 were tied to illicit activity, according to Chainalysis.
Is Crypto Totally Unregulation?
The idea that crypto is completely unregulated is closely related to the previous myth. We have come a long way since crypto’s Wild West era.
Many countries already have crypto guidelines and regulations, and the rest are working on implementing regulatory frameworks for digital assets.
People are often confused on the topic because there’s a lack of clarity and coherence in this respect, as different jurisdictions approach crypto regulations differently.
Moreover, regulating such an innovative and ever-changing asset class poses challenges to lawmakers who need a point of reference to guide them.
Crypto has never been more popular than it is today, and yet common myths and misconceptions continue to overshadow its true power and potential.
Accurate cryptocurrency knowledge is necessary to make people feel safer and more comfortable using and investing in digital assets and to pave the way for mainstream crypto adoption.
Digital currencies will only reach their full potential if crypto companies and the crypto community ramp up efforts to spread financial literacy for crypto assets and help average individuals advance their crypto education.