5 Myths About Cryptocurrency

The first cryptocurrency, Bitcoin (BTC), was created in 2009. Since then, it has revolutionized the way we think about money and has spawned a whole new industry of digital assets. However, despite its growing popularity, there are still many misconceptions about Bitcoin and other cryptocurrencies. In this article, we will discuss and answer five myths about crypto.

Article Summary

• ✍🏻  Cryptocurrency is a digital currency protected by encryption, while blockchain is a distributed digital ledger technology. Digital assets include anything that is stored digitally and has a unique identification.
• 💪🏻 Crypto assets have use cases and intrinsic values that can have strong economic value.
• 🇮🇩 Crypto investment regulations are evolving in many countries, including Indonesia, which has established crypto exchanges and imposed taxes on crypto assets.
• 🧑🏻‍💻 Investing in crypto is different from gambling. Crypto is based on technology, mathematics, and cryptography.
• 📱Platforms like PINTU in Indonesia provide easy and safe access to crypto investments, as well as educational material about the world of crypto.

5 Myths About Cryptocurrencies and Their Facts

1. Cryptocurrency, blockchain, and digital assets are the same

Many people still find it difficult to distinguish between cryptocurrencies, blockchain, and digital assets. According to a survey by FTI Technology, 80% of respondents still struggle to differentiate between blockchain technology, cryptocurrency, and various terms that exist in the crypto world. As the popularity of crypto investing grows, it’s critical to clarify the differences between these terms:

• Cryptocurrency: A digital currency protected by encryption algorithms and represented as a token that can be transferred via blockchain technology.
• Blockchain: A data-based digital ledger distributed to multiple computers in a single network. This distributed ledger system uses a sequence of blocks, or units of digital information, stored consecutively in a public format. Each block is linked to the next one using a cryptographic signature.
• Digital Assets: Digital assets are anything stored digitally and uniquely identifiable that can be used by organizations to realize a value, including non-crypto assets such as electronic documents and images.

2. Cryptocurrency has no underlying assets

Citing Investopedia, “An underlying asset is a financial asset that refers to the contract underlying the price of a derivative instrument.” In other words, the value of a derivative is determined based on the underlying price of an asset. Underlying assets are the intrinsic economic value that drives the trading of an asset. These assets can be commodities, currencies, stocks, bonds, or market indices.

In cryptocurrency, the debate continues as to whether crypto assets have underlying assets. Essentially, most cryptocurrencies that operate on a blockchain network do not have underlying assets that can help with valuation. However, some experts argue that cryptocurrencies with use cases or values can have intrinsic value. Here are some examples:

• Payments, transfers, or transactions: Bitcoin is a payment and payment network, similar to VISA and Mastercard. The difference is that Bitcoin is decentralized, where no single individual or entity has the sole authority to regulate. Bitcoin uses a proof-of-work mechanism to achieve an unalterable blockchain consensus.
• Decentralized Finance (DeFi): With decentralized finance or DeFi, anyone who accesses it can get loans in a shorter time and at a lower cost than traditional methods. Some DeFi crypto assets like Aave (AAVE), Synthetix (SNX), Uniswap (UNI), and Cardano DeFi.

So, the two examples above demonstrate how cryptocurrencies can have intrinsic value and thus have their underlying assets. This is why the crypto industry has grown so much over the past few years.

3. Cryptocurrency trading is illegal

The debate on crypto asset investment regulations continues. However, as it evolves, various countries have started to issue regulations on crypto asset investment. Starting in 2019, the Financial Action Task Force (FATF), a global watchdog on money laundering and terrorist financing, issued rules for crypto assets that must comply with AML/CFT requirements. These rules include customer due diligence, transaction monitoring including exchanges, and storage of transaction information, also known as the “travel rule.”

Subsequently, these FATF rules began to be studied by other countries including:

• The Monetary Authority of Singapore (MAS) regulates digital payment token (DPT) service providers under the 2019 Payment Services Act (PSA).
• In South Korea, virtual asset service providers have been regulated for AML/CFT purposes since 2021.
• Australia requires digital currency exchanges to be registered with AUSTRAC, which is in the process of updating its AML/CFT rules and aligning them more with FATF standards.

In April 2023, the European Union Parliament approved the Market in Crypto Assets Act (MiCA), the first comprehensive legislation in its territory to regulate digital assets.

Indonesia itself is a leading country in regulating crypto asset investments through the Commodity Futures Trading Regulatory Agency (Bappebti). There are several rules set by the government, including:

• Bappebti Regulation No. 2 of 2019 on the Organization of Physical Commodity Markets in Futures Exchanges.
• Bappebti Regulation No. 3 of 2019 on Commodities that can be subjected to Futures Contracts, Sharia Derivative Contracts, and/or Other Derivative Contracts Traded on Futures Exchanges.
• Bappebti Regulation No. 4 of 2019 on Technical Provisions for the Organization of Digital Gold Physical Markets on Futures Exchanges.
• Bappebti Regulation No. 5 of 2019 on Technical Provisions for the Organization of Crypto Asset (Crypto Asset) Physical Markets on Futures Exchanges.

In addition, crypto assets are also regulated to be a taxable object through the regulation PMK number 68/PMK.03/2022 since May 2022.

Indonesia is also the first country to successfully establish a crypto exchange. In July this year 2023, the crypto exchange has been officially launched through the decision of the Head of Bappebti number 01/BAPPEBTI/SP-BBAK/07/2023. PT Bursa Komoditi Nusantara or Commodity Future Exchange (CFX) as the manager of the crypto asset exchange in Indonesia was officially inaugurated by the Minister of Trade, Zulkifli Hasan.

Not only the exchange, in the decision contained in the decision of the Head of Bappebti number 01/BAPPEBTI/SP-LKBAK/07/2023, Bappebti also appointed the Futures Clearing Institution as the guarantee and settlement of crypto asset physical market trading to PT Kliring Berjangka Indonesia.

In recent years, cryptocurrencies have continued to attract the attention of countries, so the rapid development of crypto assets still needs to be balanced with the right regulations so that crypto investments can be easily and safely accessed by everyone.

4. Trading or investing in crypto is the same as gambling

Investing in cryptocurrency and gambling are fundamentally different activities. Cryptocurrencies offer numerous advantages, including decentralization, enhanced security, and a foundation in mathematics and cryptography. On the other hand, gambling revolves around entertainment and betting for the chance to win prizes. Cryptocurrencies, like Bitcoin, are primarily considered a store of value, with their prices potentially rising due to increasing demand.

While crypto assets do fall into the speculative asset class, comparing crypto investing to gambling is not accurate because the former is underpinned by complex mathematical and cryptographic principles that set it apart.

The crypto space continues to evolve, with various projects introducing innovative technologies. One such example is Ethereum, which revolutionized the industry by pioneering the smart contract platform, enabling the creation of decentralized applications (DApps) and Web3. Additionally, many other crypto projects have the potential to revolutionize various industries and transform the current landscape.

5. Crypto investing is very difficult

Investing in cryptocurrency is indeed still relatively new compared to other investment instruments such as stocks, gold, mutual funds, and others. However, with the rapid development of the crypto industry and crypto assets being categorized as global assets, the emergence of various crypto buying and investing platforms makes it easier for people to invest in crypto assets all over the world, including Indonesia.

As of August 2023, there are 30 Calon Pedagang Fisit Aset Kripto (CPFAK) or crypto exchanges in Indonesia, one of which is PINTU. Recognizing the huge potential of the crypto market in Indonesia, which still faces difficulties in accessing crypto investments easily, the PINTU mobile app offers its solution where buying and investing in crypto assets starts from IDR 11,000 and can be done in just a few steps:

1. Create a PINTU account and follow the process of verifying your identity to start trading.
2. On the homepage, click the deposit button and top up the PINTU balance using your preferred payment method.
3. Go to the market page and look for your favorite crypto assets.
4. Click buy and fill in the amount you want.
5. Now you have crypto as an asset!

In addition,Pintu app is compatible with several popular digital wallets such as Metamask to facilitate your transactions. You can also learn more about crypto through various Pintu Academy articles that are updated every week! All Pintu Academy articles are created for educational purposes, not as financial advice.

Conclusion

Investing in cryptocurrency and related technology is still in its infancy, which has inevitably led to a myriad of myths proliferating among the general public. Nevertheless, these misconceptions can play a constructive role, motivating individuals to delve deeper and seek reliable information regarding cryptocurrency investments. Amidst the diverse negative sentiments, the unstoppable advancement of this technology cannot be disregarded. As interest in and adoption of cryptocurrency investing continue to grow, these myths are bound to fade away gradually.

References

• Chainalysis, [REPORT PREVIEW] The Chainalysis Crypto Myth Busting Report, accessed on 1 August 2023.
• Kementerian Perdagangan RI, Sah! Bursa Kripto Resmi Berdiri, Berikut Daftar Calon Pedagang yang Sudah Terdaftar, accessed on 1 August 2023.
• Technext24, Cryptocurrency myths to let go of in 2023, accessed on 1 August 2023.
• Kevin George, Cryptocurrency Regulations Around the World, Investopedia, accessed on 1 August 2023.
• Nathan Reiff, Top Cryptocurrency Myths, Investopedia, accessed on 1 August 2023.
• Cointelegprah, 11 myths that may be holding the crypto industry back, accessed on 1 August 2023.
• Harsh Kumar, What Is The Actual Underlying Value Of Cryptocurrencies?, Outlookindia, accessed on 1 August 2023.