Cryptocurrencies, such as Bitcoin and Ethereum, have been described as the currencies of the future. Cryptocurrencies have the potential to reshape the financial world as we know it. Yet, so many people are hesitant about engaging with the concept. Cryptocurrencies remain hidden in the shadows of the internet, understood by few, and dismissed by many.
There are a number of reasons for this cryptocurrency skepticism from the general public. Below, we have put together a list of the most common causes of cryptocurrency skepticism.
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Lack of understanding
By far the most common cause of cryptocurrency skepticism is a lack of understanding of the core concepts. Quite simply, how cryptocurrency works. This is entirely understandable, especially for those who are not particularly technologically minded. Dipping a toe into the world of crypto means being bombarded with a new terminology that are unlike anything you may have experienced before.
However, there are hundreds of guides online that seek to explain cryptocurrency, its benefits, and how it works. It’s well worth reading through these in an effort to better understand the core concept. Most advocates of cryptocurrency are only too happy to help those who are new to the subject. For they firmly believe in the potential that cryptocurrencies offer to society as a whole. So, don’t be afraid to ask if there is an element of cryptocurrency that you need further clarification on.
A constant stream of bad news
It’s fair to say that cryptocurrencies – and particularly Bitcoin – have been subject to a huge amount of negative press coverage in recent years. While cryptocurrencies have had their ups and downs, it is worth considering why the downs have primarily been the focus.
In many ways, cryptocurrency is a challenge to the status quo. It is a direct competitor for the banking world as we know it. As a result, the existing banking sector is fighting back. It may sound like a conspiracy theory, but many people have concluded that big banks are attacking cryptocurrency out of fears of how it may harm them. As banks are an established part of society, their voices are amplified by the media, who may not particularly understand the concept of cryptocurrencies anyway. As a result, the mainstream coverage of cryptocurrencies trends towards negatives rather than positives.
It is also worth noting that much of the mainstream coverage of cryptocurrencies focuses on them as an investment. When Bitcoin’s price soared in the fourth quarter of 2017, there was endless news coverage regarding concerns over a bubble developing, most of which was extremely negative.
However, it’s helpful to remember that cryptocurrencies are not just an investment. These currencies are a genuine attempt to change how banking works, which means that they have an additional societal function outside of the investment price. While concerns regarding a bubble may have been justified, cryptocurrencies aren’t a bubble for investors; they have an actual function. Bubbles tend to be based on a momentary influx of money into a particular market, but cryptocurrencies are designed to be used and integrated into society. Unfortunately, the distinction between cryptocurrencies as investments, and their wider purpose, is one that many media outlets fail to make effectively.
Environmental concerns
Much has been said about the environmental impact of cryptocurrencies, with some outlets going as far as to describe cryptocurrencies as a “disaster”.
It’s true that the processing of cryptocurrencies does require a huge amount of energy, but the concern over environmental impacts is an incomplete one. First and foremost, cryptocurrency does use a lot of electricity – but if this electricity came from renewable sources, then there would be no such concerns about cryptocurrency’s impact on the environment. Therefore, the primary answer to the environmental question is to focus on switching the entire electrical system to renewable sources. Cryptocurrency isn’t environmentally harmful in and of itself.
Secondly, when discussing the environmental impact, there is little focus on the environmental impact of the current banking system. Banking at present requires a huge amount of electricity. Experts have suggested that the current banking sector uses around 650 terawatt-hours of energy per year; Bitcoin – by far the most popular cryptocurrency – uses around 35 terrawatt-hours per year. As a result, cryptocurrencies may actually be preferable to the current systems in terms of electricity usage.
Distrust of something new
Finally, arguably the biggest factor influencing the rates of adoption of cryptocurrencies is the simple fact that they are new. We humans don’t like change, and tend to be resistant to new ideas.
This is completely understandable, and in many ways, one may encourage this skepticism. Asking questions and having doubts is a good method of protecting yourself against unnecessary risk, so erring on the side of caution is always going to be a beneficial decision. This is especially true for something as fundamental as finance, where mistakes can be hugely costly.
With that said, there is a point where skepticism can become concerning. Cryptocurrencies are not a particularly new technology anymore, and they are – slowly but surely – becoming more mainstream. It is therefore worth engaging with the concept and seeking information, taking the time to research in depth prior to making the decision to buy and trade crypto yourself. Advocates of cryptocurrencies outright encourage a high level of research and caution when engaging with this world; and this research can help this “new” concept begin to feel familiar.
In conclusion
Cryptocurrencies are a confusing topic, and one that many people avoid out of a sense of self-protection. However, they are also hugely promising, and could pave the way for a radical overhaul.
There will always be a learning process required when it comes to cryptocurrencies. However, taking the time to learn the ins and outs of this promising new world is well worth it – both for your current investments, and your family’s financial future.
