The emergence of cryptocurrencies has generated in recent years endless information about a hitherto unknown world, which has led to the formation of authentic experts in the field. However, not everything that is said about digital currencies is true. Regarding Bitcoin and other cryptocurrencies there is a lot false information. In this special, we are going to review some of the urban legends most prominent.
Digital currencies are anonymous
First of all, keep in mind that one of the main advantages of cryptocurrencies is that transactions are usually carried out anonymously. But This statement is not 100% correct.
Fiat money is issued and regulated by banking entities, whose operation is monitored by the government of each country. In order to carry out operations with it, these institutions require a large amount of personal information from their users in order to verify their identity and provide security to the processes.
In the specific case of Bitcoin, according to Tekcrispy, which is not regulated by any bank or State, the situation is different. By not needing the role of these as intermediaries, we can skip the step of giving our information, personal references and even specify credit or debit cards. The characteristic peer to peer of blockchain technology does not require personal information from its members, however, if transactions are made recklessly, there is a possibility that the identity of the individual may be reached by simply following their sequence by joining a series of nodes.
Another more common way is through the use of exchange houses that, despite being so necessary, implies a risk for the security of its users, since they store their information in a single place. With this, it is extremely easy for hackers to get hold of them, through an attack on the platform.
Cryptocurrencies facilitate tax evasion
It is true that the nature of digital currencies can facilitate the process of transfer money quickly and almost anonymously. In addition, it allows users to purchase tangible goods and services. But tax evaders are caught because their lifestyle and assets are not consistent with the income they report. Therefore, governments do not necessarily need to monitor the funds.
However, the Bitcoin blockchain allows you to keep a constant and permanent record of all transactions made. So it is possible to extract information at any time. But it is important to mention that public addresses do not associate users directly; but if it is possible that if a person affirms that a particular address belongs to him, the funds of said address can be verified, as reported by El Correo de Andalucía.
These coins are illegal because they are not legal tender
That cryptocurrencies like Bitcoin or any other are not backed by any specific government does not mean that they are illegal. In fact, in March 2013, the United States Financial Crimes Control Network issued a series of guidelines on the use of this cryptocurrency. Under the regulations, any virtual currency user does not constitute a money services business (MSB) under FinCEN regulations. And, therefore, it is not subject to MSB registration, reporting and record-keeping regulations.
They do not guarantee safety
It is a fact that despite the fact that blockchain technology has been guaranteed to be inviolable, the truth is that to date there have been a large number of attacks that have resulted in the theft of cryptocurrencies from many investors. Now, at this point the main thing is to clarify that this has occurred directly to exchange houses or exchanges, and not by the direct modification of any block of the chain.
As we know, the blockchain houses the blocks verified and approved by the miners through the resolution of a very complex mathematical algorithm. These contain 1 MB of information (address of the sender’s wallet, the recipient’s, the date and the amount to be transferred) of the transactions carried out by the members of the network.
All this data is condensed into what we know as a Hash, which would be the equivalent of a fingerprint for a given block. This hash is linked to the hash of the previous block, and the one after, and once added to the chain, it is impossible to modify it. Any change that is made (by a thief who wants to change the receiver’s address or the amount of a transaction, for example), will modify the hash and invalidate and break the chain.
