December 18, 2018

The Burden Cryptocurrencies Have to Carry

Nowadays, if you say “cryptocurrency” or “Bitcoin” everyone seems to know what you are talking about. They nod, they say they have heard of it, and some even quote the last graph they have seen on the news.

Nowadays, if you say “cryptocurrency” or “Bitcoin” everyone seems to know what you are talking about. They nod, they say they have heard of it, and some even quote the last graph they have seen on the news. It is incredible how the awareness of the crypto world has grown in recent years; from obscurity to something you hear being discussed in a pub. Despite its widespread popularity, people still seem to be reluctant to believe that cryptocurrencies, such as Bitcoin or Ethereum, are the future of money. In this article, we’ll explore some of the reasons people feel alienated from this digital revolution.

First of all, it is human nature to distrust things different to what you are used to. Fear is a powerful force, and it can inhibit innovation and prevent you from seeing things from another perspective. Many are still anchored in the physical dimension, where you can actually hold objects you own. Just as many felt uneasy about replacing their CD or vinyl collections with digital files, some find the concept of a cryptocurrency difficult to grasp. This fear of uncontrollable wealth is heightened by extreme media headlines, such as “The Great Cryptocurrency Scam” or “Cryptocurrency Market Meltdown…”. Furthermore, there is general confusion because people can’t differentiate between Bitcoin and blockchain. Therefore, when they read: “Bitcoin crashes 37 percent in November, wiping $70 billion off…”, they mistakenly think that the whole system is crashing.

The negative connotations associated with the crypto world are in large part due to the criminal activities associated with it in the early stages of its development. However, the percentage of illegal transactions was so high because users thought they could hide behind their online alias. They didn’t realise their actions were not truly anonymous. A recent analysis lead by Lilita Infante — member of the DEA (Drug Enforcement Administration) — states that 90% of activities through cryptocurrencies are legal nowadays, and that criminality and cryptocurrencies should not be directly associated anymore. Infante, claims that “the blockchain actually gives us a lot of tools to be able to identify people. [We] want criminals to keep using cryptocurrencies”. Most importantly, we should remember that no technology is innately criminal, even if it can be misused by criminal users. So, let’s not always blame our problems on new technologies.

Sensational media coverage is also a factor here. We all know that if your article has a catchy — and dramatic — title about Bitcoin or Ethereum you’re going to get many clicks. Unfortunately, people are attracted to this kind of titles, and not always realise that they are being manipulated. This unregulated behavior clearly hampers the efforts of those who wish to begin a serious discussion rather than merely pedaling clickbait for profit.

Project Civil comes to the rescue in this sense, since their mission is to foster transparency and trust. They work with Ethereum and have found a reliable way to filter unreliable news; they give tokens to trustworthy writers and deduct them from deceptive actors. They are still working on their own constitution and laws, but they are definitely on the right track.

Another important factor that could be scary is the volatility of cryptocurrencies. The majority of us look for stability in every aspect of life, and not all cryptocurrencies can offer that. Nevertheless, back in 2014, a new type of coin was introduced: Tether. Its main aim was to stabilize price fluctuations in the delicate crypto ecosystem. Since then, fifty other stablecoins — that is what they are commonly called — have entered the market. Stablecoins rely on fiat exchangeable currencies, such as gold or dollars. Another option is to purchase a tokenized share of a physical asset like real estate or collectable cars. This enables you to invest in high-value assets that would probably be too expensive to purchase outright. Such tokens are linked to the value of the underlying asset, meaning that they are likely to be less volatile than conventional cryptocurrencies but have more potential to appreciate than a stablecoin. Many online journals, such as the Cryptonomist, are going in the direction of tokenization to allow readers to invest and gain from their website. This also serves as an indication of reliability in the ‘crypto news world’. The more tokens you sell, the more serious you appear. The two options mentioned are valid options for those who are reluctant to invest in cryptocurrency because of its volatility. In the end, there is something for everyone, if you are really interested.

Many factors contribute to the negative perception of cryptocurrencies. As we all know, our first impressions tend to be quite important. In fact, cognitive psychology suggests that once an object is classified in one mental category it is difficult to change it to another one. This is the way we organize the thousands of pieces of information that bombard our brain every day. It is our way of making sense of the world, and we need it to survive. Nevertheless, once we analyze the facts, we should be able to reevaluate things, right? So, it is true that cryptocurrencies carry risks with them, but they also have undeniable benefits, such as: decentralized control of the database, the impossibility of counterfeiting coins and no transaction fees. You need to find a balance between the positive and negative facts. Accept the risks and move on. For example, you wouldn’t drive if you wanted to be 100% safe, yet you do. This doesn’t mean that you should sell your car. Absolutely not. It means you learned to accept certain uncontrollable factors. You focus on the road and hope for the best. At THE RELEVANCE HOUSE, our priority is to inform and inspire people, so if you want to keep learning about cryptocurrencies, explore our blog and read more.

Photo credits:

Photo 1 by Victor Freitas on
Photo 2 by Nijwam Swargiary on Unsplash

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