Blockchain & cryptocurrency use cases, reputation, regulation and the path forward feat. NFT Tallinn

Here's a quick article answering all of your questions about blockchain & cryptocurrency

(1) real use cases;

(2) lousy rep reasons;

(3) CFTC case w/ Binance;

(4) global regulation issues &

(5) the path forward

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(1) According to reports, the number of cryptocurrency users worldwide has reached almost 300 million people.

- Are there people who use cryptocurrency daily?

- For what purpose and where?

Yes!

For example, airBaltic has already partially moved its customer loyalty program to the blockchain, as has Starbucks, while ?koda Auto is actively operating with blockchain technology, and there are many more examples.

Join us at BananaConf Global to see more such use cases.

Even our company, BananaCorp , uses cryptocurrencies to sell event tickets and accept invoice payments from our partners. In both cases, we declare all income and pay the necessary taxes - even if we use part of it in cryptocurrencies to pay for Ethereum gas and other solutions.

In general, blockchain technology has been approved and adopted by companies and countries. If you didn't know, then Google and Amazon are the most prominent investors and implementers in this field, while the US military and the European Central Bank are also testing different solutions.

(2) Why then, do blockchains, cryptocurrency & web3 still have such a lousy rep and belief that criminals love to use these tokens for their own purposes?

First, this statement on criminals is not true because cryptocurrencies are the most traceable way to move funds, which clever criminals don't actually want to use - instead, preferring cash or gold.

But let me explain where such a reputation has come from.

Until 2017, there wasn't much talk about blockchains but cryptocurrencies such as Bitcoin, Litecoin, Dogecoin, etc.

(Yes, Ethereum was launched earlier but I'd still say the real change came after 2017 bull run)

The primary use then was the movement of financial value, independent of national currencies, i.e. to protect against hyperinflation & to potentially earn profit.

The problem here hasn't been that people move financial assets or make money but that it's difficult for countries to tax that part if independence from national currencies is achieved.

Therefore they fear potentially missing out on tax revenue needed to support those in need.

However, as this rationale wouldn't keep people away from cryptocurrencies, historically, systematic anti-PR has been used, scaring people and highlighting all sorts of negative aspects of the crypto-sphere. E.g. the complexity of transaction parties identification, the large-scale use of cryptocurrencies by criminals, and excessive energy consumption.

All that worked quite well initially to keep people away, but things that have been disproved by today, and their nature has changed with the advancement of technologies, including Ethereum, Cardano, Algorand and other blockchain ecosystems.

It still works a little today because people have good memories, and journalists help maintain that image, but the web3 world has changed a lot by now - while the potential loss of control and loss of taxes is still the biggest fear of most countries when it comes to crypto.

That's where the several collapses of major crypto companies in 2021 & 2022 have opened new opportunities for the same governments to introduce new kinds of restrictions and accusations towards an increasing number of exchanges, wallet providers, on/off ramps, banks etc.

At this point, even Binance's recent accusations are nothing special - other than it being the largest and most international company. Thus its demise could help limit the circulation of cryptocurrencies quite a lot by the so-called ordinary people.

(3) Is there more to CFTC's case against Binance - after all, it's not the exchange's first accusation of law violations. More so, is it easier to circumvent the law with cryptocurrencies?

No.

Laws apply to web3 companies just as they do anywhere else.

But the reality is that blockchain technologies and everything related to cryptocurrencies is still not sufficiently regulated.

This means that there are no explicit laws today.

Thus there is a greater chance for a company to be wrong about something that initially seems to be the correct behaviour until a sudden change in understanding about laws, even retroactively.

The same goes for Binance.

It's fascinating to see how Binance is accused by CFTC of enabling the trading of Bitcoin & Ethereum as commodities. In contrast, Kraken, another exchange, is currently accused by SEC related to enabling the trading of Bitcoin & Ethereum as securities.

The problem is that no one still knows what these cryptocurrencies are, who should regulate them, how they should be regulated, etc.

And once a new approach emerges, it's very easy to sue companies based on it, even if there were no explicit rules during the initial phase.

(4) So, what are the issues in the regulatory framework of blockchain technology?

For example, should crypto exchanges use the same tools and methods large financial institutions use to comply with anti-money laundering regulations?

Again, the biggest problem is the lack of a regulatory framework.

Yes, Europe is currently developing a new regulatory package in the form of MiCa, but it also only regulates a tiny part of this technology.

When it comes specifically to crypto exchanges or other bank-like service providers regulated by MiCa, yes, they should probably follow largely the same tools and methods as other financial institutions regarding the use of EUR, USD, RBL, etc.

But, only some of the exact solutions work for Bitcoin, Ethereum, etc.

And at this point, the regulators still need to understand why these are different and how to set up rules fairly for them, including if and when a particular transaction or user can or should be blocked.

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Before we finish, here are some extra thoughts on on-chain anonymity and transaction tracing.

a/ Does blockchain technology provide anonymity to customers?

No - on the contrary, this technology makes it much easier to monitor the movement of all money.

More so, in cooperation with other activities, several tool providers and investigators have proven that monitoring crypto transactions and identifying individuals is significantly easier than without blockchain.

Yes, each token and wallet is not necessarily directly identifiable.

Still, if you follow the transactions for even 2-3 steps, it is possible to determine the persons, for the most part, already 100%.

b/ Is cryptocurrency easier to launder than cash?

- Is it easier to transfer vast amounts of money?

Oh no, even the various so-called Mixer solutions do not actually allow "money laundering" but are still very traceable.

More so, large sums of money are even easier to track, and therefore the use of such tokens is significantly more inconvenient for criminal considerations than using cash.

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We hope that over time, the understanding of the basis for blockchains and the ability of public servants to track down criminals increases while the laws according to which blockchain technology companies should behave will become more evident, as soon as possible.

When that happens, this technology will become more understandable and secure for everyone and begin to enable uses that IT people have dreamed of for almost 30 years.

And that's where BananaConf Global is our small contribution to educating users about the possibilities of blockchain technologies and regulators about the differences to the old world while helping to connect more people IRL.