By now, you’ve probably noticed it’s getting easier and easier to pay for things. Long gone are the days where you had to enter a physical store with a physical wallet and pull out a wad of cash. From credit cards and transfers, PayPal and Square, and more and more companies hanging up the “Bitcoin accepted here” sign, convenience is the name of the game.
Not only are we moving towards a cashless society where you can pay direct from your smartphone, but we’re starting to see a trend towards digital currency as well. This new economy of cryptocurrency has been around since 2009, yet there are still some surprising misconceptions about it, making it hard for the layman to understand how Blockchain and Bitcoin work.
With no central regulatory body, the concept of limited supply and 100 million pennies in a single Bitcoin, it’s no wonder we’re left feeling confused. But with so many advantages to cryptocurrency, from knocked-down fees and instant transactions, to reduced risk of fraud and cutting out the middleman, it looks like it’s here to stay. And it’s about time we addressed some of our most popular misconceptions about it.
I sat down with Ted Lanpher and Eric Lamison-White, Co-Founders of Pareto Network, a company that incentivizes objective financial information within its network with digital currency. They explained why there are so many inaccurate myths about this little-known entity. Let’s take a closer look.
1. Cryptocurrency Buyers are Technology Geeks
“One of the biggest misconceptions about cryptocurrency is that the only people buying it are technology enthusiasts and insiders,” shares Lanpher. “But, in reality, a wide range of investment funds and large asset managers have purchased Bitcoin and other digital currencies.”
It’s true that some of Bitcoin’s biggest fans may indeed be geeks in T-shirts, but with mega companies like Microsoft, Intuit and PayPal on board, the tables are starting to turn. The currency rose by 900 percent in two years against a struggling dollar; making it pretty clear this is more than just a passing tech fad.
2. You Can Only Buy a Whole Bitcoin
It’s logical to assume that you can only buy Bitcoin in whole coins. That’s just because we’re used to dealing with regular currencies. But, now one Bitcoin has reached the $4,000 level, that would price many individuals out of the market.
“It is, in fact, a misconception that you must buy currencies in integer units,” Lanpher explains. “In reality, coins can be purchased in fractions. It is possible, for example, to purchase 0.001 Bitcoin or 0.01 Dash.” So anyone can join in the party.
3. All Digital Currencies Are a “Store of Money”
This misconception is a little harder to understand and explain. Many people wrongly assume that all cryptocurrencies are variants of Bitcoin in serving primarily as a means of storing value. Yet while some coins, such as Bitcoin and Ethereum, are primarily a store of money, the majority of cryptocurrencies or tokens have other primary purposes.
Says Lanpher, “These include acting as a payment mechanism, representing a partial ownership in some physical asset, and most importantly, serving as a means to access a service, such as computing power or data storage.” Cryptocurrency then, is not just an investment or addition to your savings account, but an effective, everyday way of paying for goods and services.
4. Cost of Acquiring Cryptocurrency
“Finally,” reveals Lanpher, “many people assume that the cost of acquiring cryptocurrency is comparable to that of purchasing stocks. This is not the case. In fact, the cost of acquiring these currencies is much higher as a percentage of the value purchased.”
The most common exchanges charge several percent to purchase Bitcoin or Ethereum and some Bitcoin ATMs charge over 15 percent commission, so you need to be smart about which ones you use. Lanpher is confident that this will change though, and will “likely come down to more reasonable levels as the infrastructure develops.”
With many people concerned about cybersecurity or nervous about such drastic changes to long-standing institutions, cryptocurrency may take a while to become the new normal. But, it is time to start taking it seriously. Whether you relish the thought of instant, anonymous transactions and fractions of digital pennies, or you’re nostalgic about dollar bills, cryptocurrency is coming of age and you’re going to have to give it its due.