I am a big believer in the future of cryptocurrencies. But it seems the creators of these amazing forces have been getting a free pass. So long as prices were soaring and speculators were reaping outsized returns, who could complain? At one point the two biggies, bitcoin and ether appreciated in price more than 7,000%. But what price are we paying in terms of our security. Just as important, what are we willing to sacrifice for anonymity?
In the soul of every human being on the face of the planet there is disdain for government. In some of us it may be only a passing annoyance over a traffic ticket. In others it might verge on boiling anger over POTUS. Either way, the idea of gaining control over government holds universal appeal.
It’s this notion of having control that draws so many into the family of cryptocurrency believers. The sovereignty of bitcoin, ether, Litcoin or anyone of the many altcoins is empowering. Even if all of your transactions are completely legal, the very possibility of being beyond the reach of any tax authority is compelling.
Of course, if your motives are nefarious. . . . well we won’t go into that.
The Flaws of Government
Putting your hard earned fiat currencies into crypto may provide an escape from the government that issued that currency, but are you getting better governance? So far the jury is still deciding. This is just one opinion but here is what is missing.
Blockchain technology started out as a breakthrough in technology created by highly creative developers but things have moved well beyond that stage. If cryptocurrencies reach the potential they are touted to possess, they have to be treated as a business. That doesn’t necessitate maximizing profits, but it means being more user centric.
Speculators want higher prices, users want security, fungibility and ease of use. These last two are evolving and are low risk aspects. There is no substitute for security and for all of the anonymity of Private Keys, crypto holders have lost a ton of dough. What is disturbing to this observer is the appearance of weak governance.
Robbing The Bank
Some of the worst security is in crypto wallets where last year hackers made off with more than $100 million in ether leaving holders with nothing. As a believer in crypto and the owner of a few, I am put off every time that I log onto my wallet having to go through countless pages warning of the risks of storing coins in their vault and having my Private Key visible to hackers. The suggestion is to pay up for one of several separate storage device at a price of about $100. Of course transfering my crypto to this highly secure device will result in a fee charged by my wallet provider.
I recently caught a story on a startup company Bitfury that is creating a set of software tools to track suspicious bitcoin activity. That is very cool, of course, but that is just a startup and narrowly focused on one crypto. The need is much larger.
Managing The Bank
People put their bucks in banks knowing their deposits are insured by the FDIC. Banks are among the most heavily regulate business in the world. Banks are in business to maximize the number of mindless transactions of their customers.
The movers and shakers of cryptocurrencies need to take action. What has been done about Parity Technologies dating way back to last November? That was when a black swan event took place in the Ethereum ecosystem. A bug was activated in the multi-signature wallet released by Parity Technologies. The bug resulted in users permanently losing access to $150+million in frozen funds.
Democracy Doesn’t Work In Business
Governance in the crypto is as close to a pure democracy as can be found anywhere. Everyone’s voice gets heard. Unfortunately that makes for slow decision making and most likely the reason why democracy doesn’t work well in business.
After creating a possible solution to lost, frozen or hacked coins, developers have come up with a proposal dubbed EIP 867. In simple terms, this creates a process by which requests from aggrieved holders could be submitted in a straightforward and executable format to a specified authority.
Common sense dictates there must be a mechanism for replacement of lost or stolen. If you put your money in a bank and it is lost, the FDIC has your back covered. If someone steals your credit card, you call the 800 number.
However, the opposing point of view is that EIP 867 would threaten the integrity of the Ethereum platform. According to recent news, this is an issue that is being hotly contested. With all respect to the important details that may make this so controversial, long term believers in ether and all the other currencies prize security and the comfort of having recourse when bad things happen.
The Days Of Pure Speculation Are Over
In a recent article that addressed the current stalemate in crypto pricing, I suggested that whatever speculative bubble that ever existed in cryptocurrency was over. Now comes the time, with prices way off their highs, for long term investors to step up to the plate. It doesn’t matter if these folks are newly created hedge funds or individuals, nobody is willing to see their funds disappear. Before cryptocurrencies reach mass audiences, security must improve. The day that happens, prices will go significantly higher.
Featured image courtesy of Shutterstock.
from Crypto Currency Online https://cryptocurrencyonline.co/crypto-what-will-drive-prices-higher/