Entering the world of crypto can be a spooky experience filled with jump scares and unsettling myths, particularly for those who venture into this realm without a reliable guide. As Halloween approaches, to ensure that users are well-prepared, Binance unmasks the truth behind the two of the most haunting concerns in the crypto space, shedding light on the origins of these trends and dispelling the myths that have cast a shadow of doubt.
According to the 2023 Geography of Cryptocurrencies report published by Chainalysis, crypto adoption in Kenya is strong, with an overall index ranking of 21. Cryptocurrencies have become an important part of everyday life in many countries in the region. In this context, knowledge about digital assets and blockchain is becoming increasingly important.
Myth 1: Digital Assets Don’t Have Intrinsic Value
People new to crypto often argue that most digital assets are not backed by anything tangible or by any form of “hard” fiat currency – excluding stablecoins. In their logic, “not being backed” is synonymous with “not having any value.”
However, most fiat currencies aren’t backed by physical assets, either. They are simply issued by governments, and it is “faith” in the respective government that makes up a huge part of a fiat currency’s value.
Just as people see value in fiat money because they have faith in governments, users increasingly appreciate digital currencies as they place faith in the technology underpinning them. The value here comes from open-source code available to absolutely anyone to view and verify for themselves, which eliminates the need to trust a third party, which can be self-interested or corrupt. These are two quite different foundations of trust, yet both can be considered reasonable.
The other component of a currency’s value is the level of its acceptance and adoption. While the adoption of digital currencies as a payment tool may still be limited, their acceptance and usage for payments are growing year by year. Crypto’s use cases also go far beyond payments and the facilitation of commerce. Crypto can be used as a store of value, similar to commodities like gold, of which bitcoin is the best example. Bitcoin is a scarce asset – only 21 million will ever be created – and so it is intrinsically disinflationary (unlike fiat currencies, whose value can be diluted by monetary policy).
Finally, smart-contract-enabled assets can be used to create a virtually unlimited number of utilities in the online realm, including distributed governance, digital art, novel financial products, and unique virtual experiences, to name just a few.
Myth 2: Crypto Being Inherently Unsafe
Crypto’s naysayers like to argue that the digital asset ecosystem isn’t safe or secure for people to use because it’s anonymous, untrustworthy, and widely used by criminals. The result is that many people who know little about crypto come to believe that the entire space is somehow inherently unsafe and that its primary usage is to enable unscrupulous actors to steal, defraud and launder funds. The radical version of this myth is that crypto is, in essence, lawless.
Not only is this narrative about the crypto industry unfair, but it is also misguided. The truth is that the vast majority of actors in the crypto space are law-abiding citizens and legitimate businesses that use digital assets as a means of conducting secure and efficient online value transfers. Responsible players in the space also maintain robust guardrails and security systems that ensure user safety.
Here are some hard numbers to put things into perspective. The 2023 Crypto Crime Report by blockchain analytics firm Chainalysis states that in 2022, criminal activity accounted for only 0.24% of all crypto transactions, which is a decline from the 0.62% reported in 2020. Yes, illicit crypto addresses received $20.6 billion/(3,102,360,000,000,00KES) last year, but this is insignificant compared to the approximately $2 trillion/( 301,400,000,000,000,06 KES) of fiat currency (or around 5% of the world’s GDP) laundered through the conventional financial system annually.
The truth is that illicit activity makes up a minuscule portion of the overall volume of transactions on the blockchain, and for a good reason: if you are a criminal, using crypto is just a very bad way to cover your tracks. The transparency of blockchain is a feature, not a bug. It ensures that this new financial system is open to the scrutiny of users and crime fighters across the globe – in contrast to traditional finance, where criminal activity can go undetected for decades. As a general rule, permissionless blockchains make transactions public and traceable. This is unlike traditional, fiat-based payment systems where transactions are hidden from outsiders’ eyes and require a subpoena or court order to be revealed.
Nowadays, leading crypto firms such as Binance maintain robust know-your-customer (KYC) and anti-money laundering (AML) systems and protocols to keep a close eye on suspicious actors and transactions and report them to the relevant authorities when needed. Such safeguards have become table stakes for serious digital-asset platforms.
Overcome Your Crypto Jitters with Binance
As Halloween draws near, Binance, the world’s leading cryptocurrency exchange, has unveiled its plans to unravel the mysteries of crypto with exciting rewards and surprises totaling to $500,000 for the participants. With an array of giveaways, games, and global events, designed to help users build unique skills and gain insights into the world of crypto, Binance is ensuring that users are well-equipped for their crypto journey.
Also Read: Why Is Bitcoin Becoming So Popular in Africa?
