Since its inception and throughout its turbulent journey towards mainstream acceptance, cryptocurrencies have elicited both excitement and trepidation in equal measure. After the unfair mistreatment it has received over the years, the time has come to defend digital currencies.
Unfortunately for cryptocurrencies, first impressions count. Bitcoin (BTC) initially gained a tawdry reputation in its early years as the currency of choice for illicit activities, favored by dark web users, ransomware hackers, drug dealers, and money launderers around the world. .
But the world has changed since the first Bitcoin was mined in January 2009. There are now more than 18 million of them in circulation, and more than 90,000 people have $1 million or more stashed away in Bitcoin, according to data-tracking firm of cryptocurrencies Bitinfocharts.
In fact, there are signs that cryptocurrencies are finally gaining mainstream acceptance. just last year, El Salvador declared Bitcoin legal tender in September, and in October, the first Bitcoin futures-linked exchange-traded fund (ETF) 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 journey.
There is even talk of cryptocurrencies becoming a medium of exchange in Afghanistan, offering a very real example of financial transactions enabling cryptocurrencies in a situation where the monetary system itself is falling apart.
obstacles and barriers
Despite these success stories, lingering doubts remain among the public and politicians have expressed objections that they fear a decentralized currency that puts the general public in charge of their own money. China declared crypto transactions illegal in September, citing gambling and money laundering concerns. Politicians around the world have expressed alarm at 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 commissioned by money app Ziglu, nearly a third (31%) of Britons surveyed are curious about investing in crypto, but 62% of those included have refrained from buying because they don’t understand the market. However, As a sign that cryptocurrency is gaining legitimacy in the public eye, the survey also found that Bitcoin is now seen as 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. In an era of plummeting savings rates, this relatively new asset class offers all of us the opportunity to invest in crypto without the traditional barriers that exist in traditional finance, no matter how much money we have available.
Some people don’t even have a safe place to keep their hard-earned money.. According to data from the World Bank, 1.7 billion people around the world do not have a bank account. Many of us take for granted the ability to move money through credit cards and bank transfers, sending large sums of money to our friends and family with the touch of our smartphones, but for the unbanked, this is not possible.
However, more than 80% of the world’s population owns a smartphone, which is all they need to send crypto remittances across international borders. Cryptocurrency is driving financial inclusion by giving millions of people without access to platforms like PayPal or Venmo the ability to transfer funds for just pennies. TIt is also a good alternative for those who resent high banking fees as this new infrastructure, unlike traditional payment rails, is not restricted by the profit motive.
The advantages of cryptocurrencies
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 the need for a centralized entity.
Cryptocurrencies can also protect citizens from economic turmoil. Venezuela is an excellent example where many citizens are already suffering from high inflation and the impact of US sanctions that also affect their banks. They increasingly convert their salaries into cryptocurrencies and use the blockchain for money transfers and payments.
For developing countries, Bitcoin is a great way for society to eliminate corruption because the community can trace any Bitcoin transactions on the public ledger when people use cryptocurrency to transfer money.
Closer to home, cryptocurrencies are 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 are learning about concepts such as annual percentage rates, loans and credit, and the history and purpose of money.
Disadvantages of cryptocurrencies
But any defense of cryptocurrencies 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 this type of criminal activity.
Cryptocurrencies are not anonymous, they are pseudonymous. The open ledger in which cryptocurrencies live and move allows law enforcement to track the flow of funds in real time, providing unprecedented visibility into financial flows. Criminals also need to convert cryptocurrencies into fiat currency, creating opportunities to not only blacklist wallet addresses, but also proactively catch criminals.
This is why, like in the Colonial Pipeline ransomware attack in the US in June 2021, law enforcement was able to track down and eventually seize the ransom payment. That recovery was possible only because cryptocurrency was the means of payment.
The advantage that blockchain has is that it is tamper-proof. 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 a stub.
We are advocating for a specialized unit within cybercrime law enforcement. Because it is necessary? Have dedicated human and technical resources that can proactively work with corporations that have been breached with a cryptocurrency ransom demand. It would be able to communicate and notify all cryptocurrency exchanges so they can identify when and if the criminal wants to cash out on the exchange.
Another correctly stated issue about cryptocurrencies is the environmental impact: the massive amount of electricity required to mine proof-of-work currencies like Bitcoin requires warehouses full of powerful computer equipment in constant operation.
However, this is already changing. Right now, more than half of Bitcoin miners use sustainable energy. A Bitcoin mining operation has opened northeast of Niagara Falls on the site of the last working coal plant in New York state, using cheap hydroelectric power to run its rigs. Meanwhile, the president of El Salvador, Nayib Bukele, has announced an even more creative plan to use geothermal energy from the Conchagua volcano to power his Bitcoin City project.
Cryptocurrency’s journey towards mainstream acceptance is almost complete. So now is the time to overcome our often unfounded fears and embrace the financial freedom, security, and comfort it offers.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
The views, thoughts, and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Ian Taylor is the CEO of CryptoUK, an independent industry body that exists as a cohesive and credible voice for the evolving UK crypto industry. Having spent 20 years in investment banking, he has held many senior positions in trading, treasury and risk management, and is still involved with a major global bank. As CEO of CryptoUK, he has built a community of over 100 of the most influential industry participants and campaigns for a proper regulatory framework in the UK, Europe and beyond.