Cryptocurrency & Anonymity: Why Balance is Key
As blockchain hype continues to be increasingly tempered by reality, one of the largest points of contention remains between supporters of total decentralization and those who outright dispute the viability of complete anonymity and lack of centralized solutions.
On one hand, the appeal of completely decentralized and eminently anonymous cryptocurrency processes is a strong argument for individual digital coin users who simply want to make purchases or sell goods in a peer-to-peer fashion without feeling like Will Smith in the 1998 film Enemy of the State.
On the other, the benefits offered by centralized financial institutions within the traditional financial market, and likewise the advantages of cryptofinance service providers like crypto exchanges, are hard to argue against, especially for those keeping the market alive through trading and investment activities.
What often slips through the cracks is the third, less extreme approach, one based upon the functions of money and how the parallels between fiat currencies and digital coins illustrate the potential for a more nuanced approach.
Benefits of Balance
Instead of clamoring for exclusive decentralization of all cryptofinance at the cost of all the upsides offered by financial institutions and government regulation, why not have the best of both worlds, with different approaches taken in different contexts?
Examples of monetary activities that benefit from institutional arrangements include investment through funds, trading on exchanges, and banking, and while such arrangements are not immune to problems, their benefits are obvious to everyone.
On the other hand, the freedom to withdraw cash and perform entirely offline, direct transactions between two parties, without an intermediary or any kind of transaction tracking, remains a core principle keeping cash a viable form of fiat currency.
If we were to map these two contexts to the cryptofinance space, they would represent third party powered and peer-to-peer solutions, respectively, and showcase the value in both.
Reality Calls
Between a tightening regulatory landscape and the history of government-backed currencies, the reality of exactly why traditional financial institutions sprung up in the first place is becoming more and more evident to cryptocurrency users everywhere.
At the same time, concerns for individual user security are echoing throughout the cryptofinance space louder than ever, spurred on by some of the most successful ICOs providing infrastructure specifically to address said concerns.
Looking at this situation through a pragmatic lens reveals the need for compromise. Instead of siding with one extreme or the other, it makes sense to empower users to make the choice between decentralization and trusting third parties on a case-to-case basis.
Just as natural market forces keep traditional financial markets healthy through the agency possessed by their participants, so too can the cryptocurrency market attain the level of relative stability it needs to be reliable for everyone with a stake in it, from consumers to traders and from vendors to investors.
At the end of the day, the question becomes: can we do it? Given the practically limitless capabilities of smart contract powered cryptocurrencies and the ever-evolving nature of blockchains, the answer is a firm “yes, we can.” We have the technology.
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At Ternion we’ve taken a serious and practical stance on the future of cryptocurrency by creating a cryptofinance ecosystem that can show the world all the potential of a balanced approach to digital currencies and how it can benefit absolutely all market players in equal measure. And we’re just getting started.
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