Technology

The Worst Argument Against Cryptocurrencies

One of the most persistent – and yet baffling – narratives that frames the crypto space is that cryptos are used by criminals.

Cryptos, according to a cavalcade of “experts,” are merely a tool for criminal activity. That’s it. End of discussion.

Just take a look at some recent quotes…

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Tether - A Crypto Dollar
Image source: Tether.to

“Bitcoin just shows you how much demand for money laundering there is in the world.”

– Larry Fink, CEO BlackRock, the world’s largest asset manager

“Cryptocurrencies like Bitcoin, we should be looking at these very seriously precisely because of the way they can be used, particularly by criminals.”

– Theresa May, U.K. Prime Minister

“We will discover that behind this Bitcoin scam, some funds were channelled maybe to finance terrorism and at that point, we will wake up and realize that this is not appropriate.”

– Lorenzo Bini Smaghi, Chairman of Société Générale, a French multinational banking and financial services company

Bitcoin’s only real use has been to facilitate illegal activities such as drug transactions, tax evasion, avoidance of capital controls, or money laundering.”

– Nouriel Roubini, Economist

“Bitcoin is evil.”

– Paul Krugman, Professor of Economics, City University of New York

Now, some criminals use cryptos as a convenient method of moving value.

After all, there have been ransomware hack/virus attacks that demand users pay a small ransom in bitcoin to unlock their computers.

And who can forget the FBI’s 2013 takedown of Silk Road. Silk Road was an online marketplace used to sell illegal drugs, dirty pictures, and stolen plastic. These criminals thought that because bitcoin operated independently of the U.S. government, their activity couldn’t be traced. (They were wrong.)

But do the “experts” think that the thousands of new account opening requests per day at crypto exchange Coinbase were all from criminals?

Seriously?

Crooks are now so dumb that they are opening crypto exchange accounts by the thousands daily and readily providing personal identity and address proof in the process?

It’s like being back in the mid-1990’s and saying the internet was nothing more than a tool for accessing and distributing unsavoury images (guess what, that’s what some people used it for then, and use it for now).

Cryptos aren’t the only currency used in criminal activities

If cryptos are the currency of corruption and crime… how many bitcoin were involved in financing the 2001 terrorist attacks on the World Trade Center and Pentagon? Zero.

Precisely how many wars in the past century were funded by crypto? Zero.

And when global bank HSBC was fined US$1.9 billion for laundering money for Mexico’s Sinaloa Cartel and Colombia’s Norte del Valle cartel… how many bitcoin were involved? That would be… zero.

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In fact, every single incidence of money laundering in the history of man pre-bitcoin was conducted with fiat currencies like the U.S. dollar.

But have any experts suggest that we eliminate the U.S. dollar (and other currencies) because some people abuse it? Of course not.

I’m pretty sure every criminal also uses a mobile phone and the internet. Should we ban them too?

Again – some people will use cryptos for illegal activity. There’s no stopping that.

But in all the time I’ve spent in the crypto world, talking with blockchain entrepreneurs and founders, along with a string of blockchain venture capitalists and investors, the topic of criminality and/or money laundering has literally never come up.

In fact, quite the opposite, nearly every professional in the space expects know-your-customer (KYC) and anti-money laundering (AML) regulations to be enhanced, not diminished.

Don’t paint all cryptos with a single brush

There’s no denying that bitcoin was originally encouraged by enthusiasts who tended to err on the side of anti-government and libertarianism. And there’s still a fierce underpinning of that ethos within the crypto market today. But the market has expanded far beyond the realm of any single political ideology.

For example, bitcoin’s market value as a share of the overall crypto market is now less than a third. A year ago, it was over 85 percent.

There are thousands of crypto asset enterprises out there. Some projects veer towards radical transparency. Others are committed to providing absolute privacy. Some cryptos are plainly based around establishing personal identity. And others couldn’t care less.

As for folks like me? Well, at the most basic level I find the idea of a decentralised, fast, secure, immutable means of transferring value to be utterly fascinating and ultimately necessary. (And this is just bitcoin, a currency which is only a fraction of what crypto assets are capable of).

Two months ago, I tried to pay a translator based in China with an international bank transfer from HSBC to a bank in China. The first attempt was kicked back after several days, “rejected” by the recipient bank for no specific reason.

The second attempt went through (i.e. the funds were deducted from our company bank account), but the recipient never received them.

Where was the money then? No idea. Neither bank had an answer. (I’m not even kidding – the money was simply unaccounted for, lost somewhere).

Some SIX WEEKS later, the funds have now reappeared in our account after countless man-hours wasted.

Using a crypto currency like bitcoin cash (BCH), I could have done the transfer from my phone to the recipients in a few seconds, and verified the confirmation on a public ledger.

The point I’m making here is that the time for sweeping generalisations about the nature of the entire crypto market is long gone. It’s symptomatic of a wider trend which sees the media in general focus on the most extreme elements of a particular story because that’s what generates headlines and clicks.

The reasonable, rational and genuinely inquisitive approach is dismissed because it actually requires a bit more effort.

In my humble opinion, crypto is worth making the effort for.

Good investing,
Tama