Cryptocurrency is a new technology that has entered the general discourse and is setting the stage for a complete upheaval in our long-established financial systems. Of course, a certain skepticism cannot be avoided.
The association of crypto with crime adds to this shared skepticism. There is no denying that cryptocurrencies are and continue to be used for illegal activities around the world. However, given the increasing prevalence and applicability of crypto, the narrative that needs to be addressed is that its creation facilitated mass crime.
The first impression counts
Bitcoin (BTC) was introduced as an exchange instrument on Silk Road, an infamous online black market. Criminals, who were among the earliest users of Bitcoin, have caused reputational damage. Coupled with the mysterious origins of Bitcoin, since no one really knows where it came from or who invented it, the public prejudices about this new form of money were understandably unfavorable. Fast forward to 2021, and El Salvadorans are being encouraged to use bitcoin specifically to buy groceries and pay for utilities.
Related: The History of Bitcoin: When Did Bitcoin Start?
For the majority of viewers, crypto has abruptly moved away from its deep connections with the darkest parts of the internet in an effort to create a better future for the citizens of developing countries. This was the result of a multitude of experimentation, thriving use cases, and continued investment. For many outside observers, however, El Salvador’s rollout is a tiny positive use of an otherwise tainted technology. By not addressing the reputational damage caused by the origin of Bitcoin, the industry is easing persistent blocks between further positive use cases for crypto.
Educating the public about the real benefits of cryptocurrency would not only benefit the industry in the short term, but it would also enable the continued systemic innovation and growth of blockchain technology. BTC is the figurehead of the blockchain, and tackling misunderstandings about the digital asset is a big and necessary step that regulators and the industry as a whole have yet to acknowledge.
Related: Bitcoin’s evolving narratives make it anti-fragile
As it stands, any public questions about the links between crypto and crime are being answered by sensational headlines detailing a narrative of criminals who continually use BTC rather than the many positive advances in the wider blockchain space. A shared understanding of the actual cryptographic technology that enables peer-to-peer cross-border payments is critical to unraveling the bitcoin narrative and severing the links between crypto and crime.
Breaking down the narrative
Bitcoin is not an undetectable, anonymous, malicious technology used by hackers and nefarious criminal syndicates. It is a decentralized, fully traceable, secure peer-to-peer payment system based on the blockchain. While digital currency can be created, moved, and stored outside the control of a government or financial institution, every payment is recorded on a permanent fixed ledger.
This means that all cryptocurrency transactions, including Bitcoin, are open. In other words, the anonymity associated with crypto and crime is unfounded. Earlier this summer, US investigators were able to track down more than $ 4 million worth of Bitcoin that the Colonial Pipeline paid to the hackers during an attack. This not only underlines the traceability of cryptocurrencies, but also proves that the common assumption of anonymity is wrong.
The problem illustrated by the Silk Road and other illegal activities enabled by Bitcoin lies in the law’s inability to catch criminals who use cryptocurrency. This is changing and the playing field is becoming more and more even. In the United Kingdom, British police seized around $ 155 million worth of Bitcoin from a criminal gang, indicating the expansion of police capabilities. The real-life examples of police tracking BTC transactions disprove the notion that Bitcoin is an undetectable “crime coin”. Like fiat currency, it is simply a tool used by criminals.
While the number of ransomware attacks related to crypto seems terrifying, it is dwarfed when compared to using fiat currencies in similar crimes. In 2020, the criminal share of all cryptocurrency activity dropped to just 0.34%. For comparison: 2% and 5% respectively of the global gross domestic product (1.6 million to 4 trillion US dollars) annually are associated with money laundering and illegal activities. Given the undetectability and anonymity associated with physical cash, and the constant improvement in police skills, it is clear that the continued denigration of crypto is unjustified.
Related: Banning cryptocurrencies to fight crime is a nonsensical excuse
Part of this slander of cryptocurrency follows a naturally occurring public response to technological innovation. In the early days of the Internet, many criticized the idea of a networked World Wide Web, describing a variety of societal effects that resulted from the global expansion of the information superhighway. In a way, the internet still enables new forms of crime. However, its reputation remains unsullied to the point where society would have difficulty functioning without it. The Internet has completely broken its reputation association with crime; It is assumed that crypto will do the same.
The benefits of crypto are drowned out
These links to crime are a notable cause for concern among financial institutions as decentralized technologies continue to become mainstream. Some institutions, such as the Central Bank of Turkey, citing crime concerns related to crypto have banned cryptocurrency transactions entirely, illustrating how the false crime narrative harms general expansion and adoption of an extremely useful technology.
Related: Crypto payments banned in Turkey – is this just the beginning?
In El Salvador, a crime-torn country, digital assets offer citizens recovery amid a low-income economy. The elimination of banking costs and the low transaction fees and accessibility that comes with using Bitcoin can transform the daily lives of many Salvadorans.
In Venezuela, BTC and other cryptocurrencies are helping the country regenerate its economy from crippling hyperinflation. These benefits of crypto adoption show the enormous potential for mass adoption of cryptocurrencies, which is apparently thwarted by the consistent barriers created by the narration of crypto-crime.
Related: What is really behind El Salvador’s “Bitcoin Law”? Experts answer
In a sense, crypto represents the broader blockchain industry, highlighting another major problem related to defamation of digital assets. Blockchain can create systems in which peers can lend peers, thereby preventing intermediaries from controlling financial processes and making finances more accessible to all. Additionally, the myriad of technological innovations related to the broader blockchain ecosystem intended to benefit society must continue to fight against the false assumption that blockchain-based digital assets create crime.
As this battle continues, the early adopters of crypto are paving the way forward and generating influential engagements for the future of digital assets. AXA Insurance enables customers to pay their bills using BTC, Visa will soon be accepting cryptocurrency to process transactions on its payment network, Amatil, the Asia-Pacific distributor for Coca-Cola, has enabled cryptocurrency payments for its suppliers, and luxury brands have made a commitment Use blockchain for supply chain management. This is linked to investments in Bitcoin from major financial institutions such as JPMorgan Chase, Goldman Sachs, Citigroup, and BlackRock.
Related: Blockchain is not a panacea, but it is the savior where it is needed
Paving the way forward
Basically, the overall consensus on crypto is sustained by the message cycle and a lack of common understanding. From this we can attest to two things: crypto scares many people for the wrong reasons, and many regulators are trying to stifle its growth. The legislator wants to create strict regulation for crypto in order to eradicate the anonymity associated with crypto transactions. But this shows their lack of understanding of how crypto works.
Related: Authorities are trying to close the gap in non-hosted wallets
This lack of understanding is apparently widespread among regulators like Rep. Bill Foster, who recently spoke in an interview about the strong “sentiment in Congress that by engaging in an anonymous crypto transaction you are de facto entering into a criminal conspiracy” . “Still, Congress is not responsible for its members’ ill-informed ideas about crypto. Furthermore, if regulators and lawmakers are unrelated to technology, then how can ordinary people be expected to understand something about crypto that they are not told?
Overall, acceptance is required. Cryptocurrency and the technology behind it are used to create opportunities and technological advances in all areas of society, from healthcare to finance. Yes, some criminals use bitcoin. However, as an industry, we have a responsibility to share the good news and spread the real value of cryptocurrencies. Regulators must forego the idea that banning new technologies will make all their problems go away. Legitimizing the technology and embracing the future will enable continuous innovation in cybercrime prevention, support mass adoption, and ultimately sever the untrue idea that crypto is inexcusably linked to crime.
This article does not provide investment advice or recommendations. Every step of investing and trading involves risk, and readers should do 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 the views and opinions of Cointelegraph.
Brad Yasar is an entrepreneur, investor, mentor and consultant with a global focus on blockchain and innovative technologies. Over the past 30 years he has designed and brought several companies to maturity. Brad is currently CEO of Equifi, a decentralized global banking platform. He is also the founder of Beyond Enterprises, providing strategic and technical leadership, consulting services and support for projects at all stages of blockchain implementation and development.