Why blockchain and cryptocurrencies have a bad reputation
Blockchain and cryptocurrencies have always been subject to criticism, usually due to ignorance or jealousy. These criticisms gave them a bad reputation and we will see together all the reasons why.
Arguments against blockchain and cryptocurrencies
One of the most widespread arguments about cryptocurrencies is that they are only used by criminals. Obviously, this is completely false, all cryptocurrency users are not criminals and they do not use it for any illegal purpose. However, it would be a lie to say that there are no shady transactions made with cryptocurrencies.
“Cryptocurrencies are the currencies for gangsters”
According to Chainalysis’ 2021 Crypto Crime report, cryptocurrency illegal activities represented 2.1% of all cryptocurrency transaction volume, and this percentage fell to 0.34% in 2020. This data is against the public opinion that used to say that cryptocurrencies are created for illegal activities and used by criminals.
The story that most tarnished cryptocurrencies reputation is probably the Silk Road case. For those who do not know what Silk Road is, it was a marketplace created by Ross Ulbricht alias Dread Pirate Roberts located in the Darknet which aims to sell drugs. If you don’t know all the stories of this website, we suggest you read this.
The truth is that to assure crypto-mass adoption, we need to have more regulation and stricter security. That is why several cryptocurrency services as exchanges or wallets implement identification procedures. For example, there is the KYC process also known as Know Your Customer. KYC is a process by which a company verifies the identity of their clients and estimates potential risks of illegal activities to prevent these kind of problems.
Last but not least, cryptocurrency transactions are not completely anonymous but rather pseudonymous. Blockchain transactions are public, which means that everyone can track any cryptocurrency transactions all around the world. The idea behind it has been made to prevent any money laundering because you can track every financial transfer.
“There are a lot of scams and frauds with cryptocurrencies”
This argument appears due to several scam crypto-ads and most importantly due to ICOs.It is right that several ICOs also known as Initial Coin Offering were identified as a scam. That is what Satis demonstrates in their report. In 2018, 78% of ICOs were scams.
“On the basis of the above classification, as a percentage of the total number of ICOs, we found that approximately 78% of ICO’s were Identified Scams, ~4% Failed, ~3% had Gone Dead, and ~15% went on to trade on an exchange.”
Another study, made this time by the Boston College, demonstrates that 50% of Blockchain projects were dead after only 4 months after their Initial Coin Offering. So, it is unfortunately right that all this investment fever gives a bad reputation. However, we think that it is everyone’s fault and not cryptocurrencies only.
In a general manner, when you are interested in making an investment or when you make one, you have to clearly understand the project and what is behind the scene. The most important thing is to use your common sense. This is the same for cryptocurrency projects, when you put money on the line, you have to be extremely sure of what you are doing and expect that the money you invest is probably lost.
Today, it seems that a lot of people think that blockchain and cryptocurrency projects are the new El Dorado to make money and become rich and it is a problem because these technologies are made to make our future better and improve for example healthcare, tourism, media, commercial exchanges, and politics.
“This is not safe technology, somebody can hack me”
The argument emerges when mass media reported some cases of crypto-hacking. This has given a bad reputation to the Blockchain. However, the truth is quite different, it is very hard to hack the blockchain. Blockchain is decentralized and this feature is made to prevent attacks. In fact, there are more centralized apps like exchanges and wallets that are victims of hacking.
And that is the paradox here, people attack decentralized technology while it is not suffering from these hacks. In order to prevent hacks, centralized apps where you can use cryptocurrencies must have a better secure approach. On the user side, they have to prevent hacks by enabling 2FA also known as Two-factor authentication. It is also important to protect your private key in a safe place and be more responsible when you choose a service. In a general manner, you have to use the same common sense that you use when you use a service that uses fiat currencies. This is not because that technology is on the Internet that you must forget to secure your data and personal information.
How to build confidence for blockchain and cryptocurrencies and walk on the crypto-mass adoption
Back in the nineties, when people discovered the Internet. In the beginning, a large number of people had strong confidence in this technology and what it was able to do in the future. However, it was also difficult to explain and understand the concept behind the Internet. Obviously and unfortunately, some people are afraid about what they do not understand.
Blockchain and cryptocurrencies suffer the same treatment as the Internet in the 1990s
Precisely, it was difficult for people to have confidence in this technology when mass media like television, radio, or newspaper say that it is possible to discover a bomb plan, buy drugs or watch illegal content. In the case of the Internet, the dot-com bubble did not help to consolidate the reputation of the World Wide Web.
“Fear, uncertainty, and doubt (often shortened to FUD) is a propaganda tactic used in sales, marketing, public relations, politics, polling, and cults. FUD is generally a strategy to influence perception by disseminating negative and dubious or false information and a manifestation of the appeal to fear.”
Today, blockchain and cryptocurrencies suffer the same reputation and the same treatment as what the Internet has lived. They used to say that it is insecure due to hacking or scam. They also used to say that you can buy illegal stuff on Dark Net thanks to Bitcoin. In addition, the technical complexity between these two concepts does not help. Currently, peoples are not knowledgeable about blockchain and cryptocurrencies and we must take time to explain the basics as “What is blockchain?”, “What are cryptocurrencies?” or even “Are they safe and why?”.
It is also important to notice that the Internet is everywhere now and almost nobody discredits this technology today. There are still some haters but they are in minority now. We think that blockchain and cryptocurrencies will follow the same way as the Internet and that people will find out that it is an amazing and life-changing technology. To improve blockchain and cryptocurrencies toward this feeling and start a crypto-mass adoption, our community must offer and create new mind-blowing projects. Maybe the crypto-mass adoption will be made thanks to big companies which trust in these technologies and they maybe will create something in collaboration with blockchains and cryptocurrencies.
How to build confidence for blockchain and cryptocurrencies
For us, there are controversy and confusion in the use of cryptocurrencies. It is easy to forget that it is not an illegal technology and that there are some people that use it badly. By nature, cryptocurrencies are not bad, nor malicious so there are no reason for them to have a bad reputation.
When fiat currencies are used for criminal activities, we don’t say that is a money made for gangsters. And even if it is used for criminal activities, people will not stop using it. So, it is the same for cryptocurrencies. Your actual bank account, wallet, or credit card can also be stolen by a thief or a hacker. That is not blocking you from still using your credit card and the money you have in your bank account.
“We still have to put more in place to build confidence, where crimes are rare or have little effect on the consumer. When you get your credit card stolen, you don’t stop using it. It has a low impact. Until crypto gets to a similar level, where people are not losing these sums of money, there will always be a question mark.”
Matt Bisanz, Financial Services Regulatory Associate at Mayer Brown
We are sure that the actual fear about blockchain and cryptocurrencies is due to ignorance and a little bit due to a lack of common sense. If we introduce cryptocurrencies little by little to people in their daily life, their reputation will increase positively. In order to have confidence in cryptocurrencies and blockchain, we need to use them more and more.
“If the reputation of cryptocurrency is to change then it needs to go beyond regulation and build systems with integrity which consumers and professionals can have confidence in and trust.”
It is the responsibility of the cryptocurrency and blockchain actors, companies, and actual users to put the technology in the spotlight. For companies, to add more regulation and security in their service. On the other hand, early adopters must use cryptocurrencies properly and also help newcomers to use them intelligently.
In addition, scams and frauds, even if they will always be there, become less effective. Indeed, criminal activities are not untraceable, invisible, we can track them thanks to their pseudonyms and link them to their real identities. It is also important to mention that most of the time, blockchain projects are in public.
What is next for cryptocurrencies and blockchain? Crypto-mass adoption?
At Ilium, we truly believe in the power of blockchain and cryptocurrencies to transform our society. Even if, crypto-mass adoption does not seem to be tomorrow yet, it is getting closer and closer. As we said previously, it is our job as a community of miners, traders, businesses, enthusiasts to prepare and implement regulations and practices to have a safe and secure utilization of blockchain and cryptocurrencies. We must help newcomers to understand what is behind these technologies. When people realize all you can do and they feel more comfortable with it, blockchain and cryptocurrencies will go to the next level.