These days it’s only the lazy who can’t be bothered with making money on cryptocurrencies. Bitcoin, the blockchain, mining, these terms have been common in newspaper headlines for a long time now.
Right now more than US$146 billion has been invested into cryptocurrencies. For the first time in history, people are ready to put their money into a computer code into an industry with no offices, regulators or guarantees. But there are myths, which we’re going to talk about in this article.
Myth 1: Cryptocurrencies might suddenly crash at any time
We’re told that cryptocurrencies have no value and are backed by nothing but hype. Bankers and bureaucrats compare digital currencies to pyramids or to the 17th-century Dutch tulip exchanges that ruined thousands of traders back then. It’s understandable: they have mankind under their power, and they don’t want to let go. That’s the only reason why the information is not plain to see.
A cryptocurrency is, first and foremost, a contractual means of exchange. You may be surprised, but gold at one time was a payment instrument merely because an agreement was reached. Digital currencies are just as secure after all, their creation is the result of the laborious work of miners who invested millions of dollars in their equipment. Then there are investors, who buy huge quantities of cryptocurrencies and just keep them in their wallets. They serve as an indicator of confidence in the entire market, and also earn a profit.
Myth 2: Cryptocurrencies are illegal
Note how cautiously developed countries are treating cryptocurrencies. They are studying them and are starting to integrate blockchain technology into non-essential processes (shareholder voting, automation of orders from empty refrigerators, etc.).
Not one developed country has officially banned cryptocurrencies. Rather, they are considered an integral part of the world economy on an international level because they put all countries on a level playing field.
In Germany, bitcoins have been given the status of a “private use currency,” and Japan has defined the legal status of both the bitcoin and the ethereum. Just with the example of these countries, one can conclude that legalization is in the process, and we are certainly not seeing a total ban.
Myth 3: I’ll buy 20 video cards and mine like a king
Mining (according to companies that create turnkey mining farms) is a very promising business. You buy a lot of video cards, computers, and coolers, rent space, connect to a network and quickly recover the cost of the equipment plus a fantastic profit. That’s what they promise.
Even if you buy video cards wholesale and start mining a cryptocurrency, the process won’t be as rosy as they say. The fact is that large mining farms, including in China, whose equipment costs hundreds and thousands of times more than your 20 video cards, will grab the overwhelming share of any digital money that is created.
It often happens that mining farms sell out after an unsuccessful period, and their ex-owners start reselling video cards and mining machines at a crazy markup, which simply destroys your chances to make money.
Myth 4: You can’t make money on cryptocurrencies without farms
Ever since cryptocurrency exchanges appeared, speculators have been taking advantage of the opportunity to make quick money on the price difference.
Why buy a mining farm or invest in buying cryptocurrency if you recognize that the exchange rate might fall sharply? You can just predict the short-term cost of a cryptocurrency and make money. Cryptocurrency binary options are a tool that can bring you profit every day.
After the People’s Bank of China barred the ICO, Bitcoin crashed in value from $4,800 to $3,000. This drop was a painful blow to the wallets of those who were expecting bitcoins to conquer new heights.