5 Crypto Myths Busted: Privacy, Investments & Freedom | HackerNoon

Cryptocurrencies are everywhere these days: on the news, in your social media feed, and even in mainstream finance conversations. With all this exposure, it’s no surprise that confusion is also growing. Many people are entering the crypto space for the first time, only to be met with a sea of jargon, hype, and half-truths. Whether it’s about how private these coins really are, how easy it’s to get rich, or whether it’s even legal to use, the average user can feel overwhelmed or misled by numerous crypto myths.

That’s why we’ve taken it upon ourselves to break down some of the most persistent myths in the world of crypto, especially those tied to newer ideas like DeFi, privacy coins, and changing concepts. Whether you’re curious about mixers or worried about taxes, this guide can be for you. Let’s go!

1. Cryptos are anonymous. Or mixers are. Or privacy coins are?

One of the most enduring myths about cryptocurrency is that it’s anonymous by design. Bitcoin, Ethereum, Obyte and most prominent networks are actually pseudonymous. It means that your identity isn’t displayed, but your transaction history is public and traceable in the form of alphanumeric addresses. All movements of funds are permanently recorded on-chain (available online, for everyone), which means that, with enough information, a blockchain analyst can often link wallet addresses to real people.

That’s where mixers and privacy coins come into the conversation—but they, too, aren’t a perfect shield. Crypto mixers like Tornado Cash were designed to improve privacy by mixing the funds of many users, obscuring the origin of those coins. However, the effectiveness of a mixer depends on how many coins are there to mix. If user numbers decrease, privacy may also decrease. In 2022, the U.S. Treasury sanctioned Tornado Cash, claiming it helped launder stolen crypto tied to North Korean hackers. That caused many users to abandon the platform, and if there had been even more, there wouldn’t have been enough coins left to mix. A mixer without enough users wouldn’t really serve to preserve privacy.

Now, privacy coins like Monero or Zcash offer a different approach. They use built-in cryptographic methods to hide transaction details by default. On the other hand, Blackbytes, the native privacy coin of Obyte, can only be traded peer-to-peer (P2P) to preserve privacy, and never touches centralized exchanges. That’s a big factor if you want privacy. In the end, it doesn’t matter how private-by-design your privacy coin is if you use it on a crypto exchange that already has your identity.

Therefore, while some tools and coins offer stronger privacy features, they’re not bulletproof, and they certainly don’t make you invisible just by themselves. You’ll need additional privacy tools outside crypto, as well.

2. Easy money is possible with crypto, right?

The idea that cryptocurrency is a shortcut to quick riches is one of the most dangerous crypto myths out there. You’ve probably seen stories of someone who bought a memecoin at the right time and became a millionaire overnight. These stories are often true, but they’re rare for individuals. Like winning a lottery, for instance (lottery is real, winners are scarce). The reality is that most retail investors who jump in during hype cycles are far more likely to lose money.

According to a study by the Bank for International Settlements (BIS), many people buy crypto when prices are peaking, not when they’re low, which makes it hard to earn real returns. Even newer forms of earning, like liquidity mining or staking, are riskier than they seem. High returns usually come with high risks, such as volatile token prices, smart contract bugs, scams, or sudden protocol changes.

It’s not just technical risks, either. Many tokens are heavily manipulated by insiders. Token prices are often pumped early by large holders, who sell once retail investors start buying in. This leaves latecomers holding tokens that quickly lose value. Instead of thinking of crypto as a get-rich-quick scheme, it’s more prudent to learn how different platforms work, understand the risks, choose tokens for their actual utility, and only invest what you can afford to lose. Building long-term knowledge beats chasing the next hype wave.

3. Tokens, DeFi, Dapps, and all of it are difficult to use

At first glance, the crypto world seems overwhelming. There are tokens, Dapps (decentralized applications), wallets, bridges, and more. While it’s true that crypto tools can feel intimidating, the myth that they’re impossible to understand or use is fading fast. In recent years, many platforms have made huge improvements in user experience (UX). Numerous apps, wallets, and DeFi protocols offer simple interfaces that work much like traditional mobile apps.

That said, there is still a learning curve, especially when it comes to managing private keys, signing transactions, or dealing with wallet security. One wrong move, like sending tokens to the wrong address, can be irreversible. This makes crypto feel “harder” than older tools that let you reset a password or reverse a payment. But like email or online banking decades ago, what once felt complex gradually becomes easier as tools improve and people learn the basics.

Projects focused on onboarding new users, like prominent crypto exchanges, are helping make crypto more accessible. Educational resources, beginner-friendly apps, and simplified user flows are all becoming more common. Regulated guidelines for customer service in crypto platforms are being adopted in some regions. Therefore, while crypto still requires learning new concepts, calling it “too hard” isn’t as true as it once was.

4. Cryptos are legal. Illegal. Taxed?

The legal status of cryptocurrencies is one of the most misunderstood topics, and it’s no wonder why since it varies by country and keeps changing. Some people believe crypto is outright illegal, while others think it’s a legal gray zone where you don’t need to pay taxes. The truth is more nuanced: in most countries, crypto itself is legal, but how it’s used determines whether it falls under regulation. For instance, using Bitcoin for purchases might be fine, but launching a token sale without proper disclosures could be treated as issuing unregistered securities.

** **Taxation is another area full of myths in crypto. Many newcomers assume crypto gains don’t need to be reported, especially if they never “cash out” to fiat. However, most tax agencies, including the IRS (USA), HMRC (UK), and others, consider crypto transactions as taxable events. This includes selling crypto, trading one token for another, or even using it to buy goods and services. Tools like CoinTracker or Koinly have emerged to help users track and report these transactions accurately.

On the enforcement side, regulatory takes vary. Some countries, like El Salvador, have embraced crypto as fully legal, while others, like China, have banned most crypto-related activities. So, is crypto legal? In most places, yes, but with some strings attached. It’s important to stay updated on your local regulations and report earnings honestly to avoid trouble.

5. All cryptos are free and decentralized

Despite their fame, not all crypto networks are built the same. It’s tempting to think that all cryptocurrencies offer the same level of freedom, decentralization, and resistance to censorship. After all, isn’t that the whole point of crypto? Well, it depends on who you ask. While many networks promote themselves as decentralized, their real-world implementation often depends on several centralized layers like user interfaces, node infrastructure, and consensus mechanisms permeated by middlemen.

Ethereum, for example, uses a system where transactions are built, relayed, and proposed by separate parties. Any of these groups can choose to exclude specific operations to comply with regulations or avoid legal consequences. That’s why Tornado Cash transactions have faced issues despite still being technically possible. Even “decentralized” apps and wallets might limit access based on jurisdictional pressures. This results in a system that, while transparent and distributed, isn’t immune to control or interference.

However, not all networks operate this way. Obyte, which uses a Directed Acyclic Graph (DAG) instead of a blockchain, offers a structure where no approval layer stands between users and their transactions. There are no “validators” or miners. Transactions are directly linked to past ones by users, becoming part of the permanent DAG history. Order Providers help sequence this activity but can’t reject or censor individual transactions. This makes Obyte significantly more resistant to censorship and centralized manipulation than many blockchain-based systems.

Ultimately, crypto networks vary greatly in how free or decentralized they really are. Users looking for freedom and security should look beyond buzzwords and understand the architecture behind each platform. Choosing the right tool matters.

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