Cryptos are certainly one of the major technological developments of recent years. Indeed, in the space of a decade, they have been able to develop and conquer hitherto unsuspected markets. And at the rate they are progressing, they are likely to play a defining role in the decades to come. Their adoption throughout the world still needs to follow. Compared to some recent technologies such as the chatbot ChatGPT, cryptos are still struggling to achieve global success. A situation of which one of the main ones is fear. Because, yes, cryptos arouse more fear than enthusiasm. Here is a summary of the main causes of fear of cryptos.
I. Ignorance of the functioning of the crypto sector
Cryptocurrencies undoubtedly represent the culmination of several centuries of development, cryptography. Popularized in the late 2000s with the appearance of bitcoin, these digital assets aim to simplify our relationship with money. This, by digitizing the latter so much that our very conception of the notion of money is profoundly upset.
Because, when he thinks of money, the average citizen essentially thinks of banks and banknotes. Elements that do not exist in the mode of operation of cryptos. This fact raises doubts and fears, the human spirit being resistant to change. Even more when it comes to money, the sinews of war. Under these conditions, it is difficult for a good number of people, even among the most educated, to accept the idea of cryptocurrencies.
This situation explains why, despite the proliferation of crypto promotional campaigns, they are not widely accepted. For some, cryptos are nothing more than an organized hoax to dispossess them of their assets. They don’t design that we can validly hold digital currency. And the fact for the latter to be delivered to almost permanent yo-yos does not help matters.
II. The extreme volatility of crypto prices
It’s not a secret. Cryptos are volatile. This characteristic means that they can depreciate at any time, sometimes very quickly. This is how the crypto FTX Token (FTT) lost 96.32% of its value, between January and November 2022. The reverse is also possible. As the case of the flagship crypto, bitcoin (BTC), whose value increased by 80%, between January and April 2023.
These two examples are the archetype of the extreme volatility inherent in the crypto market. What not to carry the enthusiasm of new users who, for the most part, have a visceral fear of risk.
This attitude can legitimately be understood, especially since even the most seasoned investors hate losing money. For the crypto industry, this explains, in part, why despite their potential, cryptos are still not popular. A major challenge for this sector, which several studies confirm, however, that it will provide relevant financial solutions.
To achieve this, proper regulation must follow. Another reason for fear that makes the crypto market the prototype of King Pétaud’s court. Too risky to venture into it.
III. The lack of regulation of the crypto industry
If there is a reason for anyone to be afraid of cryptos, it is the lack of regulation of the industry. This problem is at the heart of all attempts to regulate the crypto industry initiated around the world.
Indeed, the crypto industry is built on the principle of decentralization. The notion means that there is no centralized institution that can control the credibility of newcomers to this market. Consequently, any Startup, which manages to finance its crypto project, can penetrate it. This is not the case in the banking sector, for example.
The resulting essential difficulty for someone interested in cryptos is whether a crypto is credible and viable. This, in circumstances of plethora where a large majority of cryptos are in fact scams. You only have to look at scandals like the FTX affair or that of Terra-Luna to be convinced of this.
In this context, the fear of cryptos is accentuated. Because how can you have confidence in a sector where millions of users are regularly tricked? Moreover, by firms among those considered the most credible in the industry. And that’s not counting with the few mafia uses of cryptos that have leaked.
To this can also be added security threats. Another risk for many people. Indeed, cryptos being only digital, the risk is great of being stolen by a hacker. These fears are justified, because, despite the security measures taken by the platforms, piracy is still common in the industry. Security vulnerabilities in the operation of crypto exchanges and wallets are also a major fear factor. Added to this are the cases of users who have lost their assets for a handling error.
Taken together, these factors thus constitute psychological barriers that hinder the mass adoption of cryptos. Basically, these are partly the reasons for the cancel-culture that cryptos are subject to. Several prominent investors like Warrent Buffett are officially against their development.
But that basically, however legitimate they may be, should these fears of cryptos continue to have the right of citizenship? We are tempted to answer in the negative.
IV. Overcome your fear of cryptos
While understandable, fear of cryptos can be both a detrimental and irrelevant choice. Indeed, it is increasingly certain that the latter are gaining enormous ground. Studies prove that if this dynamic is maintained, they will impose themselves in all compartments of the economies of the countries. Many of them are already preparing for it in one way or another.
However, overcoming your fear of cryptos is not just a necessity. It is a strategic financial and economic choice. This would essentially consist of learn to the fullest on these. A decision that would make it possible to understand both their functioning and that of the blockchain, the technology that underlies them. Because, with knowledge, the deepest fears dissipate, and bad decisions with them.
There is another way to reduce fears about cryptoassets. It consists of investing only funds whose loss would not compromise us financially. The volatility of crypto prices, as on the stock market, is not a myth: it is indeed a reality.
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