Not everyone is a “crypto expert” — Common crypto myths dispelled

“How mainstream is crypto?” is a question Easy Crypto is asked with increasing frequency.

The answer, of course, is mainstream enough for almost as many New Zealanders to own crypto as property; mainstream enough for El Salvador to make crypto a legal tender; and mainstream enough for there to be back-and-forth between regulatory bodies (who have realised crypto is here to stay) and crypto organisation. 

But there’s another more amusing ‘tell’ in my mind – that of ‘mainstream’ reporters and even laymen coming out as crypto experts.

“You’re a crypto expert, right?!”

Does anyone remember Oprah? When it was ‘gifting season’ every December, her audience would reach under their chairs during her famous holiday gifting shows and discover ludicrously expensive gifts: “YOU GET A GIFT, AND YOU GET A GIFT, AND YOU GET A GIFT…” she would shout.

Nowadays, it’s as if anyone who has ever written anything about finance or tech (and even casual investors) gets told (to misquote the queen of talk TV): “YOU’RE A CRYPTO EXPERT, AND YOU’RE A CRYPTO EXPERT, AND YOU’RE A CRYPTO EXPERT!”

While some of their commentary is well-informed, I’ve had not a few chuckles at some of the hilarity; although less so when I realise that opinions and ‘advice like this is often taken at face value. “I read it in the news, so it’s true!”; or “My friend invests in crypto, they know what’s what.” 

Here are a handful of the most worrying claims, phrases and beliefs I’ve come across recently; and the more reasonable views behind each. (Paraphrased, of course, as I wouldn’t want to offend you, and you, and you…)

“It’s all just about the crypto bros…”

Yes, it is 2022. Any yes, we’re still bandying this phrase about – as recently as last week. As I told Business Desk’s Dan Brunskill recently in this piece on the dangerous gender imbalance in the crypto world, for those who believe crypto is doomed to fail, phrases like this aren’t problematic because less women get caught up in the fray.

If, however, big investment banks and venture capitalists are choosing to jump into crypto (with JPMorgan launching its own coin), the door should be equally open to women to participate in, benefit from, and be leaders in the industry. 

“Crypto isn’t regulated…”

Crypto will always be a stark contrast to mainstream mechanisms of managing money such as central banks, traditional investors and governments. Crypto is powerful because of the notion of decentralisation, which translates as transparent and immutable. By design, it’s meant to empower – giving back financial control to people via the avoidance of reliance on centralised banking and fiat money. 

Importantly, different countries are at different stages in their crypto regulation journey and have taken very different approaches to regulating this asset, including how it is taxed. Interestingly, most central banks are either planning to or have started the process of launching their one central bank digital currencies (CBDCs).

As I told Startup Daily recently, in much the same way unsavoury elements find immense utility in US Dollars, the internet and mobile phone services when coordinating their efforts, cryptocurrency is a neutral tool directed by the intent of its users.

“If we add reversible transactions and central control, crypto would simply have reinvented banking?”

As I told Stuff recently, Bitcoin was originally touted as a global payment system; but has since become more popular as an investment vehicle. It has since been used for a wide range of functions, only one of which is transactions/forwarding money, for which there certainly are better solutions out there. Its far more powerful use is as a store of value; the ‘digital gold’ that people talk about. 

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Related: Is Bitcoin Real Money? A closer look into BTC as a currency

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“Crypto is a ponzi scheme”

“I don’t gamble!” is a common response from investors who shy away from volatility and lightning-fast asset cycles. The same people often argue that crypto is unregulated and untaxed (see number 3). As I wrote recently, crypto is unlike any other asset class in that it behaves very differently.

This piece on the Crypto price innovation cycle offers a snapshot into Crypto cycles, stating that “People who’ve been in crypto for a long time view the space as evolving in cycles, alternating between periods of high activity and ‘crypto winters.’ There have been three cycles so far. The first peaked in 2011, the second in 2013, and the third in 2017.”  

Closing thoughts

Crypto is here to stay and it’s not just for ‘bros’. Its use extends far beyond transactions; and it is taxed, increasingly is regulated and far removed from gambling.  But…if you would rather buy a Lotto ticket, no one’s stopping you. Good luck to you, and you, and you…