The biggest misconception in the world of cryptocurrencies is that they are assets—specifically, a monetary type of asset. This is a misconception for a simple reason: within cryptocurrency networks or systems, there is no resource that can provide a benefit to cryptocurrency owners. And it is precisely this ability to provide a benefit that defines an asset. Let's look at a few examples of assets to understand this.

With stocks, owners can benefit from the company's profits or capital. Profits can be paid out as dividends, and capital can be liquidated or used to repurchase shares.

With real estate, precious metals, oil, wheat, etc., the benefit comes from the things themselves. That is, owners can use them for housing, making jewelry and electronics, obtaining energy or food, etc.

Fiat currencies are a more complex example of assets, where the benefit comes from debt. Commercial and central banks create units of these currencies by lending to companies, individuals, and governments. This means the units represent debt. People then invest goods, services, and labor in that debt by exchanging them for the units with the aforementioned debtors. However, since debtors must return the units to banks, current owners of the units benefit from this. Because companies and individuals must sell them goods, services, or labor every time they need the units for loan repayments. And governments must allow them to pay taxes in these units. If companies and individuals do not make these sales, they will default. Then, unit owners will benefit by having the banks sell them the seized property of those debtors to obtain the units to close out unpaid loans.

Within cryptocurrency systems, nothing like this exists. There are no resources that can provide a benefit to cryptocurrency owners. There are only records.

For example, a few moments ago, one person gave another $61,182. In the Bitcoin system, this was recorded as an increment of 1 to the number associated with the first person's address and a decrement of 1 to the number associated with the second person's address. Initially, people gave each other $0.001 for the same numerical update (+1/-1).

Obviously, these numerical updates do not represent a transfer of an asset in the amount of 1, as would be the case with stocks or fiat currencies. That's simply because a person whose number has increased does not, as a result, have the ability to realize greater benefit from a resource within the cryptocurrency system. With stocks or fiat currencies, such a person would be able to receive a larger dividend from a company or more goods, services, or labor from bank debtors.

From the above, it follows that, contrary to popular belief, that famous decentralized database (blockchain) doesn't store the record of transactions. For a transaction to occur and be recorded, there must be an asset that changes owners. However, within cryptocurrency systems, no assets are involved—only records of changes in numbers associated with digital addresses.

What the blockchain actually stores is an activity log. This log tracks the operation of a scheme resembling a pyramid scheme, where participants give each other assets in the hope of receiving more assets from new participants in the future. With each such giving, the log is updated via so-called "wallet" applications, and everything is stored on the blockchain. The log is also automatically updated through cryptocurrency protocols when so-called "miners", using a trial-and-error method, find a number that meets the conditions of that protocol.

So when a person "buys" or "mines" 2 "bitcoins" for $120,000 or 300,000 kWh of electricity, they have actually paid 120 or 300 thousand units of an asset into the scheme and received the ability to change the numbers associated with digital addresses by +2 and -2. After that, they need new participants to return the same or another type of asset. Otherwise, they become a victim of the scheme.

In conclusion, since cryptocurrencies are often presented to the public in economic terms, their owners believe they possess a monetary type of asset and use it to make transactions. However, since the asset with which transactions would be made does not exist, what they actually possess is the ability to update the logs of modern pyramid schemes. In every pyramid scheme, participants give someone their asset, and in return do not receive another type of asset, but a promise, a receipt, a confirmation, or some other form of record — which is the case with cryptocurrencies.