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Crypto Weekly
Most Crypto Not Anonymous and More Centralized than People Think Cryptocurrencies, including Bitcoin (BTC-USD), are so attractive because of their anonymity - the ability to exchange payments directly with a third party without a commercial bank or government getting involved. Experts say we're actually seeing some centralization rather than the opposite.
“Instead of having decentralization and anonymity, we may end up with a world where large companies and central banks have more visibility into our financial transactions,” said Eswar Prasad, an economist at Cornell University. Prasad believes cryptocurrency could become more centralized with central banks issuing their own digital currencies. “Several other private cryptocurrencies, including digital payment platforms, may be undercut by central bank digital currencies,” he said. “Central bank digital currencies may end up providing governments or central banks acting as their agents with tools for monitoring both financial and economic practices. Cryptocurrency could
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provide more visibility into our financial transactions. And it’s not just the prospect of the government coming in,” Prasad said. Prasad said, "Stablecoins are being issued less on decentralized platforms and more by specific issuers." “Stablecoins, which are the fiat currencies that have a stable value because they are backed by fiat currencies, can certainly gain a lot of traction if they are built on top of existing social media platforms or an existing commercial platform, such as Amazon or PayPal," he said. According to him, while setting up your own account and digital wallet on a trading platform gives you a little bit more anonymity than trading on a centralized exchange,
it's still very difficult to keep your identity hidden if you use these cryptocurrencies extensively. "Anonymity is no longer the main selling point anymore," he said. He noted that crypto's relative lack of anonymity has a positive side, as it means Bitcoin is being used less for illegal transactions. Prasad noted that the FBI can uncover transactions and link digital identities to real identities if Bitcoin is extensively used to acquire real goods. “When your country's currency collapses, you may be able to get your money out of the country if you're a malicious actor using this to evade sanctions, but it's harder than people think," he said.
April 2022 | Volume 24
