If you have ever posted anything related to crypto or blockchain on the wall of the wrong financial or investing community, most likely you received a backlash. People were probably telling you that crypto is a scam, bubble that is about to burst, untrustworthy investment, a waste of time and money. Lack of trust in cryptocurrencies is more common for the older generation, but it happens with younger investors too. Why? What is causing the distrust?
Of course, if you need a one-sentence answer, I would say — the lack of knowledge. Numerous surveys reported results of people admitting that they do not understand cryptocurrency. However, every crypto skeptic has some crypto characteristics that they critique, so let’s analyze them and see how valid these worries are.
Decentralization is removing yourself from the power of a central authority. Not being backed up by the government is probably the most significant advantage in the supporter’s eyes and the biggest disadvantage from the skeptic’s point of view. People fear the volatility of cryptocurrencies. They feel that there is a chance of losing all of their digital investments, and the government will not be able to save them.
It is quite odd as the trust in government shows a drastic decrease in the last decade. However, some people still feel more comfortable when the central authorities oversee their assets. I guess it is more like people who can go rope jumping but shiver from the thought of parachuting. It is nice to put the responsibility into someone else’s hands. Thus people trust that the government and banks will take care of ensuring your funds’ safety and value, and the economy itself.
Also, if we remind ourselves that crypto assets are still a pretty new concept, we can understand that this wariness is quite natural. After all, cell phones dealt with skeptics such as telecommunications consultant Jan David Jubon who said “But who, today, will say I’m going to ditch the wires in my house and carry the phone around?”. On the other hand, we are already seeing governments getting involved, and creating their own digital assets, which might open the market to these people.
People fear that cryptocurrency has no value, or more like no tangible value. What helps out gold is that we can touch it, and see the industry needing it and giving gold intrinsic value. It reassures us of its value, and the stability of said value and needs. Same goes for fiat money.
However, it all comes down to trust again. Even in commodity money times, the value was set by people evaluating the worth of that “money” use and the actual value. But somehow people do not realize that this is precisely how fiat money works too. We trust nationally issued money more than their actual worth is. To make a single $100 bill costs 14.2 cents. The rest $99.86 is the value of your trust in the currency. But as we know, trust requires time spent to get to know what you are working with. If your significant other has an identical twin, you do not trust her or him just as much as your partner just because of the familiar looks, you do need time to get to know the person.
In 2019, hackers already stole over $4 billion in crypto crime. It is bad and getting worse, as it was around $1.7 billion for the whole of 2018. Hacks are a worry not only of crypto critics but of the people who believe in crypto too. Of course, these numbers are nowhere close to how much money hackers steal in other ways that are not related to blockchain. Overall costs of damage related to cybercrime are predicted to hit $6 trillion annually by 2021.
We are living at the times when a password written on the paper is safer than the one written on your personal computer. This is why you must take all precautions to protect your money. There are many ways to do it. First of all, you should choose an exchange that has advanced security. You should also choose more complicated and unique passwords at least for your email and exchange account, and if possible use either software or hardware 2FA (Two Factor Authentication). Also, using a cold wallet (offline wallet) is a good option if you want to be sure that your assets are out of the hands of any possible hackers.
And in the end, all comes down to the lack of understanding. It requires time and a genuine desire to understand this new digital asset class, its potential, and benefits. Some people will need time to sit down and get to know what is blockchain, how does cryptocurrency work, and how to befriend and benefit from it. Some people will need a hard push where they will be forced to look for a financial solution, and it will seem like a possible option. We will not tell you to cheer and blindly believe in crypto, but let’s not judge something without grasping the knowledge to raise a reasonable doubt.
At ROKKEX, we take security extremely seriously, and our crypto exchange is built on ‘Security First’ principle. We want to share our expertise with the broader public for the world to become happy, safe, and wise.
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