Cryptocurrency Myths and Misconceptions; Debunked! (Part 3)

Are cryptocurrencies really more popular for illicit activities? Read on to know more about this and other urban legends.According to almost every single measurable metric, cryptocurrency use is on the rise globally. Data from Statista, for instance, reveals that there are over 42 million documented blockchain wallets in existence as of the third quarter of 2019.Having said that, however, crypto adoption is skewed in favor of the technically-inclined, world over. While the barrier for entry could certainly be lowered, a more complete understanding of the technology could help the masses realize the true potential of this new crypto paradigm.In the first and second parts of this series on crypto urban legends, we explored a few myths related to Bitcoin’s blockchain, digital anonymity, and non-financial applications of the technology. In this article, we shall debunk two more urban legends that have dominated the media cycle over the past decade or so.Myth #1: Cryptocurrencies Are Primarily Used for Illicit ActivitiesWhile there is some merit to the argument that certain cryptocurrencies are used on the dark web, the vast majority of transactions processed each day are not linked to any illicit activities whatsoever. According to a report by Chainalysis, illegal transfers accounted for less than 1% of all Bitcoin transactions in 2018. Hannah Curtis, Senior Product Manager at the blockchain analysis firm,“We see a growth in the absolute value of darknet market activity in the last decade as well as a decrease in the percent of that activity as it relates to total cryptocurrency activity.”Shortly after American authorities shut down illegal marketplaces such as Silk Road in the formative years of the cryptocurrency market, perpetrators of illegal activities stopped viewing Bitcoin and other tokens as a safe haven for total anonymity and privacy. While many believe that transactions on the Bitcoin network are untraceable, the public nature of the underlying blockchain technology makes detecting trends and patterns quite simple for any law enforcement agency or dedicated analyst.Companies like Chainalysis specialize in tracking wealth on the Bitcoin network and have assisted a few high profile criminal investigations as well.It is also pertinent to note that traditional cash or banknotes are more untraceable than most cryptocurrencies — including Bitcoin. As a result, this form of money has been used to facilitate illicit activities for decades. To conclude, any form of money, crypto or otherwise, has the potential for such transactions. With Bitcoin, at least, the percentage of legitimate transactions seems to be on the rise year-over-year.In fact, developers are now even working on leveraging crypto and blockchain technologies to curb illegal activity. According to MarketOrders Co-Founder, Sukhi Jutla,“[One] way in which we can utilize crypto and blockchain technology is in providing provenance of the products. We can now provide evidence of the product’s full journey from mine to factory to customer and we can also verify the authenticity of the metals in the product. This gives a greater degree of confidence for end consumers who are now becoming more aware of purchasing sustainably and ensuring they are not buying items that are contributing to malevolent practices such as child labor or slavery.”Myth #2: Cryptocurrency Mining Is Damaging the EnvironmentCryptocurrency mining has long been criticized for its power-intensive characteristics. While some statistics claim that the energy used by Bitcoin mining could be used to power approximately 6 million American households, that figure pales in comparison when one considers that it is a mere 5% of the US’ total household electricity usage. Furthermore, Bitcoin mining is an activity that takes place on a global level.In November 2018, CoinShares Group, a digital asset management firm, concluded that over 75% of all cryptocurrency miners were using renewable energy to power their computers and mining-related infrastructure. The report is supported by the fact that a sizeable percentage of crypto mining facilities are located in areas with surplus renewable energy, like China’s Sichuan province, to save on power costs. Given that miners have to account for fixed and operating expenses like any other business, mining activity tends to gravitate towards such regions.For the percentage of cryptocurrency mining not covered under renewable energy, it is worth noting that power consumption is also a major consideration for every other digital payment method, including everything from wire transfers to trading terminals.In recent years, a number of blockchain projects have started to move away from power-intensive mining algorithms. Ethereum, for instance, is in the process of migrating to a Proof-of-Stake (PoS) based consensus mechanism, which will eliminate the power consumption problem and speed up transactions on the network. While many in the cryptocurrency community believe that the switch to PoS could allow Ethereum to gain an edge over Bitcoin, it remains to be seen whether or not that translates into higher prices for the cryptocurrency.For crypto investors and analysts around the world, such disruptive changes present a rare opportunity to profit from an already-coveted asset. Alluva, a rewards-based web app, incentivizes crypto users and investors to accurately predict the price potential of various digital assets. As a result, the platform gives institutional and retail investors an unprecedented level of clarity on such market behavior.To read more interesting content on the cryptocurrency industry, follow us on Medium here. Feel free to learn more about Alluva by visiting our website here. Lastly, follow our Twitter account and Telegram group for the latest updates on the Alluva platform.Altcoin Magazine Myths and Misconceptions; Debunked! (Part 3) was originally published in ALTCOIN MAGAZINE on Medium, where people are continuing the conversation by highlighting and responding to this story.
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