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How Crypto is Not a Scam: a Primer
In recent years, cryptocurrencies have taken the financial world by storm. A growing number of proponents laud its decentralized nature, its ability to level the playing field, and the potential for financial freedom. While many argue that crypto is not a scam, several aspects of crypto warrant further examination.
Blockchain Technology: Transparency at its Finest
Bitcoin and Ethereum, along with nearly all other cryptocurrencies, are built on blockchain technology. Blockchains are decentralized ledgers that record transactions which are pseudonymous, not anonymous. For example, we can see which wallets are transacting in crypto but not who owns the wallets. Until recently, this allowed bad faith actors to use cryptocurrency to receive payment for criminal activity. However recent FBI raids chasing down blackmail payments sent to ransomware authors strongly indicate that the FBI is slowly mapping these anonymous wallets to real world people. This is similar to how nearly all Internet IP addresses have been mapped to real world locations over the past three decades. Soon criminals will realize that the FBI has their number and cease transacting in bitcoin altogether, which will be a huge law enforcement victory.
Market Manipulation
Crypto has been rife with market manipulation scams. The real tragedy here is that none of them are new, it’s as if market manipulators stole every trick used in the 1920s on the then mostly-unregulated stock market. Disastrous crashes like FTX and pegged currencies that aren’t really pegged are about to see more market regulation, akin to the financial restructuring of the 1930s after the Crash of 1929. Methods to claw back stolen funds are being written into new cryptos. Soon, transacting in crypto will be as safe as buying stocks on the open market.
The Role of Exchanges
Many crypto exchanges defeat the intended purpose of a decentralized currency. This was discovered during the many exchange crashes of 2022. Exchanges weren’t supposed to hold crypto for transactees, except this is exactly what happened causing thousands of peoples crypto fortunes to be wiped out. Crypto holders are now demanding a return to the original decentralized premise of crypto. As soon as the rest of the bad actors go under, we should see an entirely new ecosystem arise.
Crypto will soon not be a scam
While the cryptocurrency ecosystem presents unique opportunities for financial innovation and empowerment, it is important for investors to be aware of the potential risks and pitfalls that exist within the industry. By conducting thorough research, seeking guidance from trusted sources, and maintaining a critical perspective, individuals can navigate the world of crypto with confidence, minimizing the risk of falling prey to fraudulent schemes or unscrupulous actors.
