Intrigued? Agree? Disagree? This article is intended to be a provocative discussion. And it is a personal viewpoint. At points, I will make statements that I do not agree with in the hopes it encourages the reader to think for themselves. This will enrage many, delight some, elicit disagreement and claims of ineducation, and stretch preconceived notions. These topics lack critical debate on the merits of widespread global adoption and acceptance. So let’s change that, right now.
1. Stop telling us that blockchain and distributed ledger technology will change our world for the better.
There is no sensible reason why I “must embrace” blockchain. It is difficult to remember a day without a headline bestowing the virtuous impact that blockchain technology has, and will have, on our daily lives. Yet, nobody can explain how it will do so. Talk is cheap. It doesn’t cost the claimant anything to state this, but it can certainly have an impact on anyone who decides to invest time, energy, and money into this world.
2. Cryptocurrency is not the best thing since sliced bread. It’s probably the world’s biggest Ponzi scheme perpetrated upon the general populace.
I will concede that cryptocurrency is transformative. If the recent FTX case has taught us anything, it’s that billions of tangible, liquid currency can “transform” into nothing overnight. No wonder the term “Ponzi scheme” comes to mind.
The hype surrounding cryptocurrency is incredibly self-serving for those already deep in the world of trading and technology and those who stand to profit from its acceptance as a general means of exchange. They use words and phrases like “democratize” and “inclusive” and “cryptocurrency will change the world so anyone can have access to the financial system” without explaining what that actually means and how this becomes reality. We have willing participants trusting untrustable sources.
3. Prepaid cards are the same thing as cryptocurrency, just more trustworthy.
Prepaid cards tied to banking accounts were supposed to “democratize” financial services and be an “inclusive” path to the world’s financial system for all as well. Remember? Take your perfectly good one hundred dollar bill that could be used almost anywhere in the world and deposit it into an ATM or your account. Then, use that prepaid card anywhere. Except you couldn’t use it anywhere. You could only use it at locations that accepted that card network. “Sorry, we don’t take that card.” And then there are fees – deposit, low account balance, ATM withdrawal; the list goes on and on.
This arrangement fits the definition of insanity: take $100 and deposit it into your bank account. Then transfer the $100 to a digital wallet. Then transfer it again to a Bitcoin wallet. Then make purchases from any retailers that accept Bitcoin. And hopefully, that exchange or wallet provider is still standing tomorrow.
Ask some of the most vocal cryptocurrency supporters how the technology will change the world, and you’ll get a long list of answers. Expect lots of smoke, little fire. Jargon, buzzwords, and platitudes – responses that prey upon people’s sense of empathy and genuine altruism. After all, disputing these arguments implies you’re against financial inclusion.
Fear not…
I believe something transformative IS brewing. But don’t take my word for it. Ask the tough questions – “how is this going to deliver the value you’re claiming?” and “what about blockchain technology and/or cryptocurrency is going to change my life for the better?” Force the players in these spaces to explain that Web3 is the decentralized web (and then have them explain what that all means) and how blockchain facilitates the decentralization that Web3 requires.
There are phenomenal (and also potentially dangerous) use cases evolving in the world of financial crime that are bending how we think about and accept things like identity, transactions, and risk. I’m leaning into the potential and will stop short of telling you your life will change as a result because I, just like the rest of this ecosystem, haven’t earned the right to do so
Great…but I’m still investing in cryptocurrency. Any advice?
Actually, I have three rules to invest responsibly. They are:
- Be Vigilant. Treat cryptocurrency investments with a healthy degree of skepticism and understand the potential to lose everything. Educate yourself on the risks and build your own opinion instead of repeating buzzy phrases that you heard online.
- Be Curious. Cryptocurrency isn’t going to fade into the background anytime soon despite the public hammering it is taking. That’s why potential investors should ask hard questions to make sure they understand how it works and what it can do. The more you ask, the more you’ll understand if this is something you want to get involved in.
- Be Measured. If you’re ready to invest in crypto after doing your research, take a measured approach. Don’t dive headlong into this market, but don’t cut yourself off from it entirely either. Instead of investing all your money or buying a whole coin, start small.
The End…
A healthy dose of skepticism can help us all avoid the next FTX disaster. The underlying technology that powers crypto and enables Web3 has potential. But make this world prove its value and push back on those who can’t.
Download our eBook, Machine Learning in the Cryptocurrency Age, to learn what banks need to do to offer legitimate crypto use cases.
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