The market is showing signs of recovery, and many are becoming interested in crypto again. Therefore, many people use tools known as crypto profit calculators and connect their portfolios, hoping to get rich overnight.
But is it possible to make a killing with crypto? There are indeed fortunate people who have had strokes of luck. But, the truth is that there are many myths around earnings with cryptocurrencies. So, today we will break down some false beliefs about the profits achieved with crypto. We will also alert you to the risk of harmful practices that could make you lose your investment.
Some myths surrounding the cryptocurrency market
“Crypto is a fast track to big profit”
The general belief is that cryptocurrencies are a shortcut for making big profits. Hence, some even mortgage their houses to put all their money into a specific crypto asset. But, unfortunately, reality hits most, and they end up poorer than they were in the beginning.
Thus, if you are interested in starting to invest and get crypto profit, you first should know that nothing is sure in the cryptocurrency market. For example, just as Bitcoin reached $69,000 in November 2021, that price fell by 70% in a year.
“Cryptocurrencies are a bubble and will go to zero”
Certainly, some cryptocurrencies have lost value and attractiveness to investors. It’s also true that the developers of some projects have abandoned them completely, and their communities have dissolved. But, if we look beyond the last year, the cryptocurrency market has grown astronomically.
Også, some solid projects on the market for years have decided to improve daily, as is the case with Ethereum og Cardano, for example. Thus, it is true that anyone can make a profit with crypto. But, it would help if you had a little patience, thoroughly researched, and made good decisions before investing.
“All cryptocurrencies are pyramid schemes”
We call a pyramid or Ponzi-ordningen a business scheme in which the participants have to refer and attract more customers. These new entrants, in turn, have to get more people into the business and so on. The objective of this referral scheme is that the new participants produce benefits for the original participants.
The problem with the Ponzi scheme is that those at the top of the pyramid eventually collect their earnings and leave new entrants without the money they invested.
Indeed, finding yourself facing a pyramid scheme is one of the greatest dangers encountered by investors entering the cryptocurrency world for the first time. Unfortunately, there are a lot of shitcoins and DeFi projects that have been identified as scams.
However, pyramid schemes are a legacy of traditional money. Actually, its name derives from the misdeeds committed by the Italian Carlo Ponzi in the 1920s.
For example, Bitcoin has been around for more than ten years and is a financial tool and legitimate asset that came to revolutionize the global economic system.
How to avoid Ponzi schemes in crypto and make a profit?
If you want to stay away from pyramid schemes, you need to identify the most common red flags:
Much ado about nothing: It’s a warning sign when a project offers high returns on investment, regardless of whether the market is down. The market is highly volatile, so the promise of a high crypto profit is unrealistic in most cases.
Undetermined origins: In most cases, if there is no clarity about the people who developed the project or led the investment, it is most likely a scam.
Low liquidity: If the project offers a reasonable return on investment or even a high crypto profit, but the tokens obtained are illiquid (cannot be exchanged for goods, services, or other assets), it’s a scam too.
“Crypto is illegal, and crypto profit comes from illicit acts”
Some places worldwide, such as Kina, prohibit cryptocurrency activities. For this reason, any action that seeks to obtain crypto profit could be punished by law.
Likewise, as we have indicated, some scams take advantage of cryptocurrency investors. Furthermore, there is still money laundering, fraud, hacking, and theft in the crypto world.
But, you don’t need to be a criminal to make a profit with crypto. The days when Bitcoin used to be irretrievably linked to illicit activities are long gone. Over the years, regulatory bodies such as the securities and exchange commission (SEC) have advanced initiatives to regulate crypto and thus protect investors.
Besides, there are places like El Salvador where cryptocurrencies are legal tender. Secondly, advances in DeFi offer multiple alternatives that translate traditional financial mechanisms into the crypto world.
Cryptocurrencies are here to stay. Therefore, once we dispel the most common myths, it‘s clear that they will continue to be an excellent investment mechanism for many people.
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