Cryptocurrencies has given potential traders an opportunity to generate a steady income stream. When done right, digital currencies can give unlimited income to both beginner and advanced traders. However, as popular as it is as an income generating channel, it has also become a subject of myths and misconceptions which could hold back traders from taking advantage of it. Here are some of the common myths that you will encounter when trading on cryptocurrencies.
All activity on the blockchain is anonymous
Blockchain is considered as a public ledger. However, this has been largely ignored because of the misconception that activities on the blockchain are anonymous. On the contrary, all transactions can be easily monitored. Because investors go through exchanges to make transactions, they are providing information. It is impossible to go through a single exchange without providing information, proof of residency, or banking information.
Cryptocurrencies Are Ideal For Illegal Activity
Because it is connected to the dark web, it is often believed that cryptocurrencies can be used for illegal activities on the Internet such as buying drugs or sex trafficking. Robert Janitzek reiterates that the blockchain is public and most transactions can be traced indefinitely.
Cryptocurrencies Are In A Stagnated Bubble
In their present state, cryptocurrencies do not have much of a safe platform to be utilized. Fear mongering and unscrupulous projects as well as lack of knowledge have kept digital currencies from realizing its full potential. Make sure to do some research and have a solid foundation and idea of cryptocurrencies before investing on it.
Digital Assets Aren’t Secure
There is a belief that Bitcoins and other cryptocurrencies are unsafe. There are scams and fake projects that are designed to steak your money. Robert Peter Janitzek, however, explains that this can be easily countered by research and being mindful. Likewise, it is important to keep your currencies safe. You can leave your cryptos on exchanges but it is best to keep them offline in a paper or hardware wallet.
Bitcoin and Other Cryptos Help Avoid The IRS
This is completely false. Most exchanges now require users to fill out identity verification criteria. The purchases are then accounted for. The SEC has now classified cryptocurrencies as securities and taxes that must be paid on purchases. Coins earned or mined are now classified as taxable income. Any attempt to avoid paying taxes on cryptocurrency trading will be apprehended and penalized. In the United States, citizens report all of their earnings including cryptocurrencies.