On Crypto assets- Do we worry?

For the last few years, interests in cryptocurrency and blockchain related topics have skyrocketed. Active investors, traders have increased by manyfold. People and to some extents Governments have mixed reaction on this. Some have accepted this change whereas some are doubtful. El Salvador became the first country to accept Bitcoin as a legal tender and also plans to create “crypto-city”. On the other hand, China has taken steps to clamp down crypto-mining and crypto assets as a whole.

 

I am an ardent fan of new technologies and as such I adore Blockchain for what it can offer. People sometimes forget but cryptocurrencies are just one of the applications made possible by Blockchain technology. But the current debates and discussions are not on Blockchain, rather on private cryptocurrencies. Here are few of my points on this matter, as per my limited knowledge (anyone may choose to disagree)-

What are the cons/ worries associated with cryptocurrencies? One valid point is the energy pollution involved in the mining process. I somewhat agree with this point, but then there are already ‘greener’ tokens with alternate strategies to reduce pollution. Transition from ‘Proof of work’ to ‘Proof of stake’ comes to mind too.

The other and probably the bigger reason to worry is that it’s unregulated. To be precise, it is not regulated by any central agency/ institution (e.g., Govts). Also because of the anonymity it can provide, crypto assets are becoming attractive medium for illegal activities. These are worrying points for any government. But here’s my take on this. One of the primary reasons that Bitcoin and other such crypto assets were introduced, was to create a ‘Decentralized’ transaction system. Although in a democratic system, masses elect representatives to guide and maintain a country but in reality, most of the power lies in the hands of a few. Thus, it’s very easy to disrupt an economic system through a few bad decisions by the people in power. There are past examples of that. So it makes sense to build a decentralized system governed by everyone in that system.

Now, for the illegal part. It’s true that due to its anonymity and the constant need to build privacy-protecting system, crypto assets have become attractive and useful for illegal activities. It is indeed a point to worry. People and organizations fight for data privacy. Some people think that no one should be privy to information exchanged between each other. But, to what extent this privacy layer should exist? And what should be the exception criteria? This is more of an ethical debate to me. 

Applications or technologies providing more privacy have the potential for catastrophic exploitations.

 

So, to conclude, I do not think regulating and/ or banning crypto assets is the way to go. Adapting to new technologies should always be on the card for any Govt or institutions. One better way might be to train and educate law enforcement officials to deal with such evolving new technologies. Moreover, common people- the mass should be more aware of all the risks and advantages involved. And this approach should be the ‘go-to’ motto for any new technology, whether it be Blockchain or Artificial Intelligence.