DeFi
September 28, 2022
What is Token Burn and it's effects on price
An A-Z guide on token burning and how it is largely impacting the cryptocurrency industry.
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When anything becomes popular, a lot of people start talking about it and when that happens, sometimes information is miscommunicated and that leads to certain rumors or myths concerning the topic of discussion.
This also happens when there is a kind of mystery surrounding anything and cryptocurrencies are no different. The name itself has the word ‘crypto’ in it, which means a secret in loose terms.
Cryptocurrency is something that needs a good amount of research for any person to understand it completely. But a lot of people do not want to put in the effort and listen to any rumor or fake news that is spread about this topic and thus, myths about cryptocurrency are created.
This article discusses some of the most common myths and lies that are very popular all over the world. We will tell you whether these myths have any credibility or not. So stick around and clear away all the unwanted information from your mind.
Cryptocurrency has been around us for a long period but from the past two years it has gained popularity and sought people’s interest. But with popularity there comes criticism and rumors spread amongst the populace. That’s why we have heard so many myths about cryptocurrency.
So let’s clear out some myths and make some space for some straight facts. Here we have outlisted 5 Myths about Cryptocurrency.
Bubble is the term used for the companies which are considered as overvalued against what they hold, just like that people consider Bitcoin as a bubble. Many people consider investing in bitcoin thinking about getting big returns in exchange.
Bitcoin has experienced many ups and downs and varied a lot on the price cycle, over the time bitcoin has recovered every time and today it is the cryptocurrency with the highest market cap. But people usually think of it as a bubble.
The perfect example of Bubble is “Tulip Mania”, this company was so hyped in the 17th century, the bubble for tulip mania lasted for 6 long months but it burst and was done and dusted after that. People compare bitcoin with Tulip Mania, which had a price surge of 26 fold.
Just like the downfall example, we have some successful examples too. The market giant Amazon had a time where its stocks nosedived, the stocks fluctuated from $100 to $5. After that we know where Amazon stands now. So the concern of bubbles is genuine but a currency standing for more than a decade can be trusted.
Many investors believe that bitcoin will surge and disappear with low fluctuation and it will last for a longer period and will settle after gaining stability. These are beliefs and predictions that reality can be opposite of but for now, considering bitcoin as a bubble is not fair.
Cryptocurrency has gained popularity very quickly in the last few years, many new users have joined the platform to invest in the new digital currency and make profits. Cryptocurrency is widely accepted in the market and you can find many merchants and platforms where they accept cryptocurrency as a payment option.
This popularity did bring scammers with it as well. People will scam you and loot you by offering different tips and tricks. We do experience this sort of scam in our day to day lives as well, where people call us and pretend to be a bank agent or government official and then proceed to ask for our personal details.
Just like that, people get scammed in the crypto world when someone calls them and pretends to be a government official and asks them to pay a sum in crypto currency that might be their debts or something like that. Apart from that, one of the other major scams in the crypto world is launching fake currency.
This scam happens where a company hypes the market for launching a new currency and starts unregulated fundraising, people start investing in it and then it turns out to be a scam. This way, many companies loot people, you can even find such scams on the Federal Trade Commission’s consumer website.
But even with this huge drawback, you cannot tag cryptocurrency as a scam. There are people who use the loophole and try different ways to loot people as they do in fiat currency but you can avoid all that if you are just alert and gather enough information about everything before investing your money.
Until 2013, every major transaction was under control of centralized financial authorities and banks. Therefore, anything other than physical transactions was risky from a criminal's point of view. Therefore, it may seem like cryptocurrencies might have promoted illicit activities furthermore.
Additionally, the dark web is also dependent upon cryptocurrency to some level. Money being sent to the contacts from the dark web are not easy to track and hence most of the time, this money can be used to perform illegal activities.
However, the blockchain data analysis companies who constantly monitor and record transactions all around the world have a surprising report to present. According to the Chainalysis, during 2020-2021 the number of transactions regarding hideous activities were only 0.34% of total crypto transactions.
Compared to the pre-crypto times, the number of transactions using traditional money were far greater than it is now. There are now agencies and dedicated departments which constantly monitor suspicious transactions. The transactions are being tracked from source to end receiver to find out where the money is being used at.
Fiat currencies have existed for a while now and are globally accepted as a means of exchange. Whereas, cryptocurrencies are relatively new to the world and have just started to get into mainstream finance.
One of the biggest news from 2021 was that El Salvador announced that citizens can use Bitcoin as a legal tender. Although the adoption of cryptocurrency is slowly rising, the cryptocurrency is yet to replace or even work alongside fiat currency as a payment method.
There is resistance from governments and banks as well as citizens due to high volatility and lack of awareness. Companies like Tesla, Microsoft and Paypal have begun accepting Bitcoin as a payment method and hopefully governments will accept cryptocurrencies soon.
Cryptocurrencies are based on blockchain technology and it works in such a way that we need to spend energy in terms of electricity to generate or mine new tokens. In terms of Bitcoin or even Ethereum for that matter, it consumes a considerable amount of energy resources and it can be a factor of concern.
However, for the traditional banking system to keep working, a good amount of energy is spent which includes power consumed by offices and buildings, bank branches, ATMs and many more. Now consider these institutes consuming power on a global level!
Coming back to cryptocurrency, the newly developed cryptocurrencies are far more energy efficient than the old age networks. Additionally, efforts are being taken to upgrade the existing cryptocurrency networks. For example, the Ethereum network will undergo an upgrade in 2022 which will significantly reduce energy consumption.
That was all about cryptocurrency and myths related to it. Trusting anything without having an idea about that platform is not a good call. Try to learn about the platform and do thorough research. Myths could save you as well as manipulate you to the point where you will never trust the currency.
Rest is all up to you, your proper research and better understanding can help you to make decisions for your future investment. We hope you liked our content and found it engaging. If you want to read more articles like this, you can check out our website, till then stay tuned with us!
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