To begin, we want to preface that Bitcoin is not the only cryptocurrency available. Though Bitcoin is what started it all, there are plenty of other cryptocurrencies (also known as altcoins) in high circulation like Litecoin, XRP and Chainlink, just to name a random few. When discussing crypto payments, be sure to recognize the distinctions between each currency type.
In general, there’s a lot of falsehoods surrounding crypto that can easily mislead those who are just starting out. CoinMarketCap has compiled a list of all the myths and misunderstandings that a newbie might have when first discovering the world of blockchain technology — we wan to make sure that you don’t make the same mistakes so many do.
5 Myths a Crypto Newbie Didn’t Know About Bitcoin
1. Crypto Is Not Just for Buying Drugs!
Crazy, huh? Though Bitcoin did gain popularity as the currency for buying MDMA during the peak Dark Web days, it is not just a currency to buy illegal substances. Nowadays, youcan use Bitcoin to make payments at popular retailers like Home Depot, Microsoft, AT&T, Expedia and Whole Foods. You can also use Bitcoin to donate to nonprofits like Wikipedia and select political campaigns.
2. Crypto Is Not an Instant Payment Method
Every cryptocurrency has a different transaction speed. For instance, Ethereum (ETH) payments are processed faster than Bitcoin (BTC) payments. That being said, most digital currency payments are not instantaneous. It can take anywhere from a few minutes to several days for your Bitcoin transactions to get processed, depending on any delays that may occur.
3. Crypto Is Fully Taxable
Though Bitcoin is decentralized and possesses all this secretive anti-government sentiment, it is still fully taxable. If you make any money investing in cryptocurrency exchanges (like Coinbase or Binance), you have to provide your tax info to cash out and pay income tax on your earnings. Unfortunately, digital assets are still considered assets that are subject to audits and government oversight by most countries. CoinMarketCap has a blog post with tax tips if you have crypto tax questions, here.
4. It's Not Free to Send Crypto
It would be totally sick of the blockchain developers to forgo all transaction fees on crypto payments. However, for most cryptocurrencies, there are transaction fees with every payment, which are used to compensate the miners who are working to process and validate your transaction. The fees largely depend on the currency used, and the urgency of your payment. Often, if you pay a higher transaction fee, you can incentivize miners to process your payment faster.
5. You Can’t Always Get Mega-Rich
I’m sure you’ve heard all the stories about accidental Bitcoin billionaires. Though some people have certainly gotten lucky, not every person who invests in crypto makes millions. There’s a lot of volatility in the cryptocurrency market — which means that the market can go crashing down a day after it skyrockets. There are plenty of investors who have lost tons of money on bad investments, so be sure to do your own research before you transfer all of your hard earned cash into Bitcoin on a whim!