Cryptocurrency, as a concept, although still widely unaccepted, has seen a tremendous increase in acceptance in the last decade. Its popularity has been based on a few factors, including its decentralized nature- being devoid of any governing entity- and the anonymity and speed of transactions its users enjoy.
However, recent occurrences have put a question mark on most of the things we know about cryptocurrency. This article will look at these occurrences and the questions they raise about cryptocurrency, and also try to X-ray the effects these questions may have on the cryptocurrency market’s future.
Seizure of Crypto Assets
One of the strongest selling points of the Crypto concept is anonymity. Users can carry out transactions on the blockchain without being identified. That is not to say that the transactions are hidden, though. The transactions are open for all blockchain users to see.
However, earlier this year, authorities in the US could trace the source of a 2016 Bitcoin heist worth $3.6 billion and arrest the controllers of the wallet containing the lot. A lot of such confiscations and arrests have been made in the recent past, amounting to hundreds of millions of dollars worth of cryptocurrency in seized funds. If the person behind a wallet can be identified, it begs the question, “is the anonymity ascribed to Crypto a hoax? “
While the war rages on, amidst tranches of sanctions and counter-sanctions flying all over Europe, getting funds to people who need them is becoming increasingly difficult. In response, some fundraising efforts have chosen cryptocurrencies as a vehicle to get much-needed help to the people who need them. Concerns have been raised that the Russian government may also be taking advantage of this vehicle to avoid the sanctions imposed by western countries.
If this turns out to be true, it brings quite several possibilities, which may have dire consequences in the future. Questions like “Will Crypto impede the effectiveness of sanctions, thereby giving rise to more direct confrontations?”; and
since great powers will resort to physical confrontation, with their allies’ involvement, if sanctions can no longer be effective;” will this increase in direct confrontation hasten the spiral down to a world war?
Many countries in the world are starting to take action toward removing the dollar as a reserve currency. For reasons ranging from concerns about the infestation of the world with American inflation to the tendency of the US to use the dollar dominance to wage economic wars, countries are working toward creating a multipolar monetary system to replace the dollar as world currency.
What does this have to do with cryptocurrencies?
As the world races towards de-dollarization, it has been speculated that cryptocurrencies may be the currencies to replace the dollar. Considering that the currencies of the major proponents of de-dollarization, such as Russia and China, cannot rise to replace the dollar for various reasons, cryptocurrencies may rise to that occasion due mainly to their decentralized nature.
What does it all mean for Crypto in the future?
“is the anonymity ascribed to Crypto a hoax?”
Simply put, Crypto transactions are no longer as anonymous as they were once touted to be. This means that if the government has any reason to believe that a particular wallet has been used for crime, it can only be a matter of time before it is confiscated. This is mainly because of a lack of utility associated with cryptocurrencies because it is not generally accepted yet.
This may benefit Crypto because it’ll give the average user a sense of security. The grossly limited acceptance of Crypto is because many people still see it as a scam, being that it is unregulated. Still, if people see that an erring user can be brought to book without compromising the independence of the currency, it’ll open more people up to getting involved in Crypto.
Will Crypto impede the effectiveness of sanctions, thereby giving rise to more physical confrontations?
World powers try to avoid physical confrontations and tend to rely heavily on proxy wars and sanctions to achieve their aims. Still, when sanctions fail because the sanctioned entity is dodging them, and proxy wars are now seen as what they’re, these powers may resort to direct confrontations, which may spiral down to a world war.
To an extent, at least for the time being, Crypto has the potential of being used to evade sanctions. Arguments against this are that the crypto market isn’t large enough to facilitate such, and for now, it may be largely unsuccessful; but as the volume of crypto transactions grows and its acceptance deepens, it may become a very viable tool for dodging sanctions.
This may be alarming to governments worldwide, and in the wake of the Russo-Ukrainian war, it is safe to expect a trend of regulating crypto worldwide.
Crypto will likely see an avalanche of regulatory laws in many countries in the coming years. Since most countries in the world are already jumping on to the digital currency trend, it is safe to say that with these regulating laws, total acceptance of cryptocurrencies is in the offing.
However, care must be taken in this acceptance. A global framework amenable to all participating countries must be considered if the full benefits of crypto can be enjoyed without the dire consequences it portends.
Written by Ezifeh Chinua, freelance B2B tech writer.