Common Crypto Misconceptions (2022): Don’t Believe Any Of These!

by | Oct 27, 2021 | Reviews | 0 comments

Cryptocurrency has been around since 2009, yet there have been many false stories surrounding it.

This tends to create a wrong impression and FUD about cryptocurrencies.

And most folks; both traders and newbies have bought into them.

In this post, I have written down the top 10 misconceptions about cryptocurrencies.

This is to ensure that you are well informed and fend them off if you come across them.

10 Cryptocurrency Misconceptions That You Shouldn’t Fall For

The following are some of the misconceptions we’ll debunk:

  1. Bitcoin Has Crashed
  2. Government Can Shut Down Cryptocurrency
  3. Cryptocurrency Is A Ponzi Schemes
  4. The Fastest Way To Become Millionaire Overnight
  5. Leverage And Day Traders Make The Most Money
  6. Investing In Cheaper Coins Is More Profitable Than Bitcoin
  7. Bitcoin Is The Only True Cryptocurrency
  8. Cryptocurrencies Are Used For Nefarious Activities
  9. Bitcoin Has Environmental Impact
  10. CBDC Is A Threat To Cryptocurrencies

Let’s dive in right away.

1. Bitcoin Has Crashed

It may appear to be a joke, but most people who are inexperienced in the crypto space think the entire bitcoin system has collapsed.

Now, let me tell you a short story.

During the bitcoin price meltdown of May 2021, I went to a retail store to pick some stuff.

And I happened to be proudly sporting the “CTmastery” polo shirt.

To my utter shock, the store owner, a lady, stared at me with dismay, then asked the most unexpected question:

“You do crypto? I thought bitcoin has crashed? “ πŸ˜ž

Sadly, the lady is unaware of the high volatility of cryptocurrencies.

She doesn’t also understand that a price drop doesn’t mean the entire system has been shut down.

2. Government Can Shut Down Cryptocurrency

As a sequel to the above, the narrative that the government can crash down on cryptos has become all-too-common.

But this is just a fallacy because the government can not actually ban crypto physically.

China and Nigeria, for instance, have banned crypto yet they remain the world’s largest crypto markets.

The reason is that cryptocurrencies are decentralized digital assets and they cannot be controlled by the government.

And even if the government can stop exchanges from facilitating fiat on-ramp services, there are still ways to bypass it.

3. Cryptocurrencies Are Nothing But Ponzi Schemes

I recall talking to a friend about bitcoin in 2020, and he remarked, “I don’t think I’d like to invest in bitcoin right now, it’s a Ponzi scheme.”

This is unsurprising considering that many people particularly in Africa, first learned about cryptocurrency through Ponzi schemes like The Billion Coin.

Crypto Ponzi schemes still exist today, and the majority of unsuspecting people fall for them.

Go to the internet and you will find a lot of them, Forsage, Lionshare, Six Sigma, etc.

All posing as one of the legit ways to make money in the crypto space with promises of unrealistic RIO.

However, what people fail to recognize is that a vast chasm exists between cryptocurrencies and Ponzi schemes.

Cryptocurrencies are decentralized virtual assets, while Ponzi schemes are scams.

4. The Fastest Way To Become Millionaire Overnight

The idea that cryptocurrency could make you filthy rich is commonly touted in blog posts, and other social media platforms.

Sadly, the majority of people who invest in cryptocurrency today are only following this trend.

They overhear their friends brag about their crypto earnings, and they want to make a quick buck in the same way too, without due diligence.

Now, it is true that crypto millionaires do exist, and crypto has the potential to make you one.

But understand that crypto investments are risky and most people have lost a large amount of money investing in crypto.

Worst of all, the same phrase “make you a millionaire” has been adopted as bait by fake crypto projects when they are about to launch a scam coin.

This is something you should also watch out for.

5. Investing In Cheaper Coins Is More Profitable Than Bitcoin

I can bet on some people who would rather invest in Shiba Inu than in Bitcoin.

Their claim is that because BTC has a large market cap, profiting from it is very difficult compared to profiting from cheap, low-cap altcoins.

But this is only true to an extent.

Moreover, your presumed 100X coin could turn out to be a shitcoin.

Imagine buying a low-cap altcoin at $0.38 but instead of picking up from that price level, it plummeted and remained at $0.002 in perpetuity.

This isn’t to say that 10X and 100X hidden gem coins can not be found in low-altcoins.

However, considering the BTC track record, it is far safer to invest in it than invest in low-altcoins.

6. Leverage And Day Traders Make The Most Money

There is a widespread notion among crypto traders that “spot trading” is boring while “day and leveraged traders” make the most money.

Well, this is not so true because:

  • It’s tough for day traders to spot a price trend on a daily chart, and you can end up paying more in fees than you make.
  • On the other hand, most leveraged traders get liquidated and lose their money.

This isn’t to suggest that leveraged and day trading aren’t profitable; rather, it’s to make you understand how irrational this notion is.

7. Bitcoin Is The Only True Cryptocurrency

The widely held belief among bitcoin maximalists and extremists is that BTC is the only true cryptocurrency that will ever exist.

Additionally, they also believe that BTC has all the use cases of a blockchain.

This, however, is untrue and can be refuted.

For instance:

When compared to other blockchain networks such as NEO, Solana, and Nano, the BTC network is a snail in terms of scalability.

Ethereum is remarked revolutionary today because it introduced smart contracts into the blockchain.

On the other hand, BSC, Tron, EOS, and some other blockchains make it possible to perform transactions on the blockchain at a low cost.

Given this, we can conclude that each blockchain has unique functionality.

And although bitcoin has proven to be the most secure network, it is not the only true cryptocurrency.

8. Cryptocurrencies Are Only Used For Nefarious Activities

There has been a slew of articles about crypto criminal activities.

And it has led some to conclude that cryptos are currencies that are widely used by criminals.

The truth is, the amount of money laundered using cryptocurrency pales in comparison to illicit bank transactions. 

Gladly, a report shows that by the end of 2020, criminal activities accounted for only 0.34% of all cryptocurrency transactions.

Meaning that about +95% of all the crypto transactions are used for legitimate purposes.

Just so you know, most crypto transactions, except for privacy coins can be traced back to a real person’s identity via cryptocurrency exchanges KYC.

Now, this mitigates the potential of cryptos as criminal tools.

9. Bitcoin Has Environmental Impact

One of the stories that have circulated in the media is that bitcoin mining is harmful to the environment.

And it became more popular ever since the billionaire, Elon Musk, tweeted about it.

However, like with the other myths we’ve covered, this isn’t even close to the truth.

To disprove this, let’s consider the following facts below:

  • A research conducted by Coinshares, shows that bitcoin mining uses 74.1% renewable energy, making it more enviromental friendly than other energy powered industry
  • In addition,  this publication by Square illustrates how bitcoin mining could become the revolution of green energy consumption

10. CBDC Is A Threat To Cryptocurrencies

Nigeria’s own CBDC, the e-Naira, was just launched (Oct. 25, 2021).

And people are already debating whether it will replace the Nigerian stable coin “NGNT“.

Far from it, many people perceive the CBDC as a threat to the cryptocurrency space.

The argument was heightened after the Chairman of the Federal Reserve of the US, Jerome Powell, remarked that CBDCs “could undercut the need for cryptocurrencies”.

However, you and I both know that this will not be the case.

The reason for this is that, while CBDCs are good fintech, they are susceptible to government control.

And not so many people would opt to use centralized currency over decentralized cryptocurrencies.

That’s it for my top 10 crypto misconceptions.

Join me in the following section, where we’ll wrap up this post!

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This is the end of this post and I am glad that you made it to the end.

Cryptocurrency misconceptions are so pervasive that some could threaten crypto mainstream adoption or even have an impact on your portfolio.

The best way to fend off these conceptions is to conduct your own research, which is what you have just done now.

Now is the time to share your thoughts on these misconceptions.

Do you think I missed any?

What other misconceptions do you have to add to the ones I’ve listed?

Have you ever fallen for any of these misconceptions?

Put your thoughts in the comment section and I will respond immediately.

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Paschaline Anagor
I am a passionate crypto enthusiast with over three years of experience in the crypto world. Sharing insights on crypto trading, Web3, DeFi, NFTs, and the latest crypto news. Subscribe to the blog to explore the world of digital currencies!