Cryptocurrency’s Image Problem: A Conversation That We Need To Have

We’ve all had conversations with people who don’t trust crypto, and want nothing to do with it. We try to explain the virtues of a blockchain-based currency to them, and they visibly recoil from the conversation, as though we’re talking about secret nuclear data stolen from the CIA.?

Crypto?has been portrayed as?“dirty” due to its history?in?DarkWeb?use and?anonymity in making illegal transactions.?It’s been dismissed as having “no real value”?because it isn’t a fiat currency?(more on this in a moment.)?The CEO of JPMorgan Chase even dismissed?Bitcoin?as “Fool’s Gold” recently.?

Some don’t trust it, some don’t understand it, but most are coming to the realization that?we’ve?known for a while now:?Cryptocurrency?is here to stay.?Companies from Tesla to?Home Depot to?Starbucks now accept it as payment.?Benoit?Coeure?of the?Bank for International Settlements?has urged world banks?to start minting?central bank digital currencies immediately.?The aforementioned JPMorgan Chase even started their own cryptocurrency?in 2019.?

So how does a community-based, peer-to-peer currency exchange clarify the image of what crypto really is? How do we?help people understand?that Bitcoin, cryptocurrency and blockchain aren’t?shady, evil or dishonest;?they’re actually?quite the opposite??

The answer is right in the question; as a community. Here are the three biggest misnomers?about cryptocurrency?that you’ll probably hear over the holidays, as well as how to politely?discuss them…hopefully?without getting candied yams thrown at you:?

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Misnomer #1: “Cryptocurrency?Is Dirty Money.”?

The majority of this?reputation comes from?crypto’s involvement with Silk?Road,?a bitcoin-only site?used for a variety of criminal transactions.?However,?aside from the anonymity the?Internet provides, cryptocurrency is no dirtier than any country’s fiat money (and in a literal sense, it’s much cleaner.) Illegal?transactions still take place every day, and cryptocurrency represents?a small fraction of the currency seized; cash is still king?in that realm.?

The Truth: Cryptocurrency is specifically designed around?transparent transactions.?

This may seem simple to you and I, but most people?still?don’t know this.?While?crypto allows?anonymity through the Internet, every?blockchain?transaction is public and permanent. You can see a history of where?funds have been?and?what they’ve purchased. If any?company wants to be completely transparent with their?business dealings, cryptocurrency is the future for them.?

Furthermore, and this is something the black hats have found out the hard way,?it’s very, very difficult to be 100% anonymous on the Internet.?Silk Road was closed down?in late 2013.?The owner,?Ross Ulbricht,?was arrested,?convicted of a?multitude of felonies, and is currently serving two?life sentences plus 40 years.?170,000 Bitcoins were seized by the FBI and later auctioned to the public?as “washed” coins.?As with anything that has a ledger entry, cryptocurrency?transactions leave a trail behind them. And trails eventually get followed.?

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Misnomer #2:?“Cryptocurrency is made up.”?

This is the one that might start an argument. Your good old Uncle Fred might take a $20 bill out of his wallet, boldly slap it on the dinner table and say something like, “I can hold this in my hand and walk in to a store anywhere in the country and it has VALUE! This Crypto nonsense is just made up!” Then you’ll go back and forth about the gold standard and fiat currency, and before you know it, someone’s wearing most of Aunt Marge’s jello salad.?

The Truth, Part One: Uncle Fred is right.?

Of course?it’s made up. It’s?all?made up.?To quote Jeremy Irons from?Margin Call:?“It’s just money. It’s made?up. Pieces of paper with pictures on?it?so we don’t have to kill each other?just to get something to eat.”?It’s all about what people think is worth something.?People?always valued shiny yellow rocks,?but they?got awfully difficult to carry around, so?people used?pieces of paper?to represent?the rocks. Today,?we?carry around pieces of paper that?our governments?say have value.?Tomorrow, we’ll have value in digital wallets.?

The Truth, Part Two: The gold standard is actually a pretty good comparison?to Bitcoin.?

The main reason?every country in the world abandoned the gold standard is that there’s?a finite amount of gold in existence, and there wasn’t enough gold to back up the paper money that represented it.?Similarly, there’s a finite amount of bitcoin?that will ever be mined, but it’s divisible down to a single?Satoshi, or .00000001 Bitcoin.??

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Misnomer #3: “Cryptocurrency doesn’t have any real value, and no country uses it as fiat.”?

There are two main entities that have been shouting this from their proverbial rooftops for years.?In a revelation that will?shock very few people, these two entities are governments and banks.?Make no mistake, decentralized?finance?(DeFi)?has the attention of government regulators and monetary institutions around?the globe.??

The very purpose of decentralized?finance is to create peer-to-peer monetary exchanges, without regulations or bank fees. While there are?legitimate points to be made about the need for oversight and controls on exchanges, let’s not pretend?that there isn’t a very wary eye on the?revenue stream?that governments and banks could lose through?DeFi.?They stand to lose a LOT of money, and they’re not particularly happy about that.?

I mean, it’s not like?governments or?corporate banks would ever do anything dishonest and underhanded?to keep money, right??

The Truth, Part One: Bitcoin?and many other?cryptocurrencies?are governed by?one of the oldest laws of economics.?

That law is supply and demand.?Any coin with a hard cap will have a limited supply, which inherently increases demand. The difficulty with the demand side of the equation?until recently?has?been?the retail limitations.?Those limitations, as explained above, are starting to disappear; you can now go into a Tesla dealer and buy a car with Bitcoin.??

The Truth, Part Two:?Bitcoin is now a fiat currency.?

Last month, El Salvador?recognized Bitcoin as legal?currency,?and?purchased?$20mm?worth. This is the first country to officially recognize Bitcoin as fiat, and opens the door?for?other countries?to follow.?

Whether the answer is to adopt an existing coin, create a government-backed stable coin, or use a corporately-backed bank coin, one thing’s for certain: Cryptocurrency is here to stay on a global scale, and that is by no means a bad thing. Although the rollout of Bitcoin in El Salvador has been bumpy, there’s certainly been progress. As of this writing, the adoption of Bitcoin has resulted in about $4mm of profits for El Salvador.?

They plan to build schools.?

So?there you have it.?As you sit down for dinner around the table with friends and family this holiday season,?remember to be kind and patient in any crypto discussion, even with Uncle Fred.?

Because next year, you might have to explain NFTs.?