Why digital currencies deserve a better reputation
From its inception and throughout its rocky journey to mainstream acceptance, crypto has generated both excitement and concern. After the unfair beatings it has received over the years, now is the time to defend digital currencies.
Unfortunately for crypto, first impressions count. Bitcoin (BTC) first gained an unsavory reputation in its early years as the currency of choice for illicit activity – favored by dark web users, ransomware hackers, drug dealers and money launderers. money around the world.
But the world has changed since the first Bitcoin was mined in January 2009. There are now over 18 million in circulation, and over 90,000 people have $1 million or more hidden in Bitcoin, according to to cryptocurrency data tracking company Bitinfocharts.
There are, indeed, signs that crypto is finally gaining mainstream acceptance. Last year, El Salvador declared Bitcoin legal tender in September, and in October, the first exchange-traded fund (ETF) linked to Bitcoin futures in the United States began trading on the New York Stock Exchange. . Payments giant Visa also launched a global crypto advisory practice in December, helping financial institutions advance their own crypto journeys.
There is even talk of crypto becoming a medium of exchange in Afghanistan, providing a very real example of crypto enabling financial transactions in a situation where the monetary system itself is collapsing.
Related: How do Afghans use cryptography under the Taliban government?
Obstacles and Barriers
Despite these successes, nagging doubts persist in the public and objections have been voiced by politicians who fear a decentralized currency that puts the general public in control of their own money. China declared crypto transactions illegal in September, citing concerns about gambling and money laundering. Politicians around the world have expressed concern about its potential to transform the established dynamics of the existing financial ecosystem.
The underlying factor behind all of this is fear and recent research suggests it could be a fear of the unknown. According to a national survey order By money app Ziglu, nearly a third (31%) of Britons surveyed are curious about investing in crypto, but 62% of those included held back from buying because they don’t understand the market. A sign that cryptocurrency is gaining legitimacy in the public eye, the survey also revealed that b
Bitcoin is now considered a smarter investment than property.
Now is the time to recognize that while there are inherent risks, cryptocurrency is also a force for good in the world. At a time when savings rates are falling, this relatively new asset class offers us all the opportunity to invest in crypto without the traditional barriers that exist in traditional finance, no matter how much or how little. money we have.
Related: Stablecoin adoption and the future of financial inclusion
Some people don’t even have a safe place to put their hard-earned cash. According to according to World Bank data, 1.7 billion people in the world do not have a bank account. Many of us take for granted the ability to move money with credit cards and bank transfers – sending large sums to friends and family with the click of a button on our smartphones – but for the unbanked, It is not possible.
However, over 80% of the world’s population owns a smartphone, which is all they need to send crypto funds across international borders. Crypto is boosting financial inclusion by giving millions of people without access to platforms like PayPal or Venmo the ability to transfer funds for mere pennies. It is also a good alternative for those who dislike high bank fees since this new infrastructure, unlike traditional payment rails, is not constrained by the profit motive.
The benefits of crypto
Smart contracts can replace the services of banks, money transfer companies or legal services, while cryptocurrencies and digital wallets can provide flexibility such as credit for customers and financial sovereignty without no centralized entity is required.
Crypto can also protect citizens from economic turmoil. Venezuela is a prime example where many citizens are already suffering from high inflation and the impact of US sanctions which are also affecting their banks. They are increasingly converting their salaries into crypto and using the blockchain for money transfers and payments.
For developing countries, bitcoin is a great way for society to eliminate corruption because the community can track any bitcoin transaction in the public ledger when people use cryptocurrency to transfer money.
Closer to home, crypto is also democratizing finance. There are low barriers to entry without the need for a broker or high net worth. Anyone can invest and create wealth for themselves. As a result, people learn concepts such as annual percentage rates, lending and borrowing, and the history and purpose of money.
The disadvantages of crypto
But, any defense of crypto cannot avoid the elephant in the room: crime. It has long been associated with fraud and ransomware, but the truth is that blockchain is the perfect system to thwart such criminal activity.
Related: Bitcoin can no longer be considered an untraceable “currency piece”
Cryptocurrencies are not anonymous, they are pseudonymous. The open ledger on which crypto lives and moves enables law enforcement to track and trace the flow of funds in real time, providing unprecedented visibility into financial flows. Criminals also need to convert crypto into fiat currency, creating opportunities to not only blacklist wallet addresses, but also proactively catch criminals.
This is why, like the Colonial Pipeline ransomware attack in the United States in June 2021, law enforcement was able to track and eventually seize the ransom payment. This recovery was only possible because cryptocurrency was the means of payment.
Related: Don’t blame crypto for ransomware
The advantage of the blockchain is that it is inviolable. Through a process known as consensus, each transaction is independently verified by multiple parties. Entries are immutable, meaning they cannot be changed and can only be updated by adding an addendum.
We are advocating for a specialized unit within law enforcement for cybercrime. Why is it necessary? Have dedicated technical and human resources that can work proactively with companies that have been breached with a demanded ransom in crypto. It would be able to communicate and notify all crypto exchanges so that they can identify when and if the criminal wants to cash out on the exchange.
Another issue rightly raised about crypto is the environmental impact: the huge amount of electricity needed to mine proof-of-work currencies such as Bitcoin requires warehouses full of powerful computing rigs in constant operation. .
However, this is already changing. Currently, more than half of Bitcoin miners use sustainable energy. A bitcoin mining operation open northeast of Niagara Falls at the site of New York State’s last operating coal plant, using cheap hydroelectric power to run its platforms. Meanwhile, Salvadoran President Nayib Bukele has announced an even more creative plan to use geothermal energy from Conchagua Volcano to power his Bitcoin City project.
Cryptocurrency’s journey to mainstream acceptance is almost complete. Therefore, now is the time to overcome our often unfounded fears and embrace the financial freedom, security and convenience it offers.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Ian Taylor is the Executive Director of CryptoUK, an independent industry body that exists as a cohesive and credible voice for the evolution of the UK crypto industry. Having spent 20 years in investment banking, he has held numerous management positions in trading, treasury and risk management, and is still involved with a major global bank. As Chief Executive of CryptoUK, he built a community of over 100 of the industry’s most influential participants and campaigned for a suitable regulatory framework in the UK, Europe and beyond.