Cryptocurrency Exchanges are online platforms managed by entities or financial companies that allow users to buy, sell, and exchange cryptocurrencies for additional assets such as FIAT money and other digital currencies. Although these platforms have become very popular due to the adoption of some cryptocurrencies globally, there are some myths about these platforms. Here are the most common myths about cryptocurrency exchanges.
Unsecured Platforms
Many people think cryptocurrency Exchanges are insecure because they are hosted in the cloud or online. The truth is that many financial institutions or companies host their cryptocurrency Exchanges on platforms with high-security levels since they use different security measures and protocols. It is important to remember that cryptocurrencies are established on blockchain technology. It stands out as a database with high-security standards and is distributed with encryption technologies that increase its security level.
However, these security standards will depend on the company behind the platform, so it is vital to select the right company i.e., with several years of experience in the industry that complies with various local and international standards and regulations.
Another point to consider is that besides the platform’s security level, the user must manage his passwords and accesses correctly. For example, if the platform has high-security standards, but the user uses simple passwords, does not safeguard passwords, connects to virus-infected equipment, etc., then the chances of having a bad experience or performing unsafe actions will increase considerably.
Exchanges are exclusively for cryptocurrency trading
While cryptocurrency trading is an essential part of the functionality of some exchanges, many do not have this feature. In contrast, other exchanges may offer additional services such as lending, stacking, rewards programs, payment processors, FIAT accounts, digital wallets, etc. Because of this, it is significant to research the various features and services offered by an exchange before using it.
Platforms for use in illicit activities
Some think cryptocurrency exchanges are ideal locations for individuals and criminal organizations to perform transactions. However, cryptocurrency Exchanges comply with anti-money laundering and anti-terrorist financing rules and regulations.
On the other hand, generalizations prevent us from objectively analyzing a topic, event, or problem. If we have doubts about this topic, we can look at some reports or studies about the actual percentage of illicit activities in that environment. When you see a study, you should check which company or entity is behind it and the sample size used.
For example, according to Chainalysis data, about 0.1% of all transactions on cryptocurrency exchange platforms during 2021 were related to illicit activity. On the other hand, CipherTrace estimates that illegal activity was between 0.62% and 0.65% of global cryptocurrency activity in 2020, while in 2021, it fell to between 0.10% and 0.15% of international activity in 2021.
Anonymous and untraceable transactions
Many people believe that transactions within a cryptocurrency exchange are anonymous and untraceable. However, a cryptocurrency exchange records all transactions through its cryptographic ledgers based on blockchain technology. While there is user anonymity, this is not absolute, as the ledger record allows for user identification if this is strictly necessary (e.g., at the request of a regulatory entity).
Complex Platforms
Some people think that cryptocurrency exchanges are complex and challenging to use. Although the cryptographic concept and blockchain technology may be difficult for some people, platforms are intuitive and user-friendly, besides having technical support and accompaniment from the service providers to facilitate their use. An example is the Pilsenga Exchange, which has a 100% user-friendly platform adapted to the needs of medium-sized companies, in addition to personalized and specialized support.
Manipulating the Value of cryptocurrencies
Many people think that cryptocurrency exchanges manipulate the market value of cryptocurrencies. However, the only thing that can define a cryptocurrency Exchange is the rates or fees charged for each transaction within its platform. On the other hand, the market value of cryptocurrencies is volatile since it depends on different factors such as market supply and demand, utility and functionality, mass adoption, and scarcity, among others.
All cryptocurrency exchanges are equal
Some people and companies think that all cryptocurrency exchanges are the same; however, each exchange has its characteristics, such as fees, supported cryptocurrencies, rules, user interfaces, security measures, etc. Some exchanges focus on individuals, some on businesses, some on ease of use and beginners, while others specialize in advanced features for experienced traders. Because of this, it is essential to research and choose an exchange that suits your particular needs and preferences.
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