Are cryptocurrencies scams? Do they really have a meaning?

Are cryptocurrencies scams?  Do they really have a meaning?

Opinions may vary, but cryptocurrencies are the most popular and fast-growing investment options

Experts say it’s human nature to be afraid and wary of technologies unknown to the world. During their inception, cryptocurrencies have faced similar consequences. Initially, investors were fairly certain that cryptos were only used to fund terrorism and conduct illegal practices. But eventually it was clarified that cryptocurrencies have multiple real-world implications; not only that, its underlying technology, blockchain, can be integrated into business models and used by distinct industries to conduct regular operations efficiently. Nevertheless, to this day, many people are skeptical about the influence of cryptocurrencies as a long-term investment asset and do not consider them relevant. Many of these critics view cryptos as nothing more than scams or Ponzi schemes. Let’s see how cryptocurrencies work to determine why we should or should not label cryptocurrencies as scams.

How do cryptocurrencies work?

The basis of a cryptocurrency’s operation is its underlying technological blockchain. It is the way to store information but without placing it in a particular place, it distributes the data between all the users of the system. In technical terms, it is a continuous and successive chain of blocks of information, which are normally stored and processed independently in many computers.

Cryptocurrencies do not have a central authority that oversees or regulates them. These digital currencies are distributed across the network, among market participants, allowing investors or users to bypass banks or central authorities and avoid fees on payments, or other expenses or transactions. Users gain full freedom of action with cryptocurrencies since there is no obligation to the network. Since their money can’t be frozen, they can do whatever they can with it.

This is one of the many reasons why most governments and centralized financial organizations are considering adopting cryptocurrencies as legal forms of payment. Countries like India have launched their own centralized cryptocurrencies to ensure that illegal practitioners cannot use digital currencies as funds, and also to protect investors from being scammed by these criminals.

Why don’t people consider cryptocurrencies to be scams?

Assets like gold and silver have tangible value because of their industrial applications. The act of purchasing goods like jewelry and accessories, etc., is considered purchase value. Then when it comes to unencrypted cryptocurrencies, their underlying blockchain technology and cryptography tend to solve several problems related to double-spending. Similar to physical or local currencies, digital currencies also contain intangible core value with their decentralization and somewhat limited supply. The rise of the pandemic has led to widespread inflation, which has led to the collapse of world economies. With this lingering circumstance, investors have taken refuge by investing in cryptocurrencies. Alternatives to fiat currencies like Bitcoin have become an attractive asset to invest in.

Even though very few of them can be used as legal payment methods, leaving investors with very little space to use them for other purposes, their limited supply and scarcity play a crucial role in investors’ preferences to use digital currencies as an inflation protection commodity. There are several success stories from crypto traders and investors who have made high incomes from crypto trading. But there are several skeptics who would prefer to consider the opposite and deny the usefulness of cryptocurrencies. But why?

Why do skeptics consider cryptocurrencies a scam?

Several critics believe that carrying out an unlimited number of transactions securely in a dangerous and decentralized environment comes at a cost. The underlying blockchain networks of cryptocurrencies do not allow previously verified transactions to be deleted or erased. Therefore, blockchain and crypto companies can collect unwanted data without users’ permission. Not only that, market analysts who are not in favor of cryptos say that all assets should come with basic tangible benefits. The point of being a digital asset class with no inherent value is stuffing.

They think the technology is just a technique for making transactions and has nothing to do with cryptos or industrial advantages. Cryptocurrencies have no intrinsic value and should be considered an asset class. Moreover, considering cryptos as a currency is even wrong since the printing of money in physical or digital form is always based on some kind of tangible asset, like gold or other assets, and major cryptocurrencies as Bitcoin and Ethereum do not follow this rule, leaving us with the few hundred stablecoins.

The essential

The idea behind cryptocurrencies is that it is a popular and fast growing industry with extreme volatility and fairly decent to high volumes. It depends on the mentality and preference of investors whether they are willing to risk their money on an uptrend or just go with the flow. Nevertheless, it is always prudent to monitor the growth and dynamics of the market.

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