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If you’ve been following investment news during the last few years, you’ve undoubtedly seen plenty of coverage of cryptocurrency. Every time Bitcoin experiences a dramatic rise or fall in value, news organizations roll out headlines either proclaiming the death of cryptocurrency or a new future in finance.
Needless to say, such dramatic proclamations have helped circulate a wide range of myths about cryptocurrency and how it can be used. Separating fact from fiction is essential for truly understanding cryptocurrency’s implications — both now and for the future.
Myth #1: Cryptocurrency is only used for illegal activities
Cryptocurrency has gained a reputation for being used for illegal activities, in part due to the anonymity associated with cryptocurrency platforms. This anonymity stems from blockchain technology, which is ironically the same technology that makes all transactions on the platform transparent and public.
In reality, criminal activity represents a tiny fraction of the transactions that are performed using cryptocurrency. Research from Chainanalysis estimates that a mere 0.34% of cryptocurrency activity in 2020 was used for illicit activities. A similar analysis from CipherTrace determined that criminal activity accounted for less than 0.5% of cryptocurrency activities.
While these analyses are hardly perfect (critics note that such an analysis is only…