Part II – Ethics of cryptocurrencies
7.3 Why cryptocurrencies will change the world
In the speed of modern times new discoveries are constantly being made and technology is developing further and further. With the advent of cryptocurrencies, this could very well be the start of a much greater progress. Perhaps it is still unlikely for some people at this point, but once you understand blockchain technology you may expect that cryptocurrency is not going anywhere anytime soon. One indication is that rising demand points to increasing acceptance.
Sooner or later cryptocurrencies will change the world for a number of reasons. Decentralization is a key element in blockchain technology and the fact that you can transact cryptocurrencies without an intermediary is one of the essential features with significant repercussions. Increasing your privacy is one of them. Seeing what banks ask of you to have your own money, it may be very attractive for people to make free and anonymous transactions on the blockchain without all your movements being monitored.
Not everyone who wants more privacy for their financial transactions is a criminal for that one and only reason; There may be very good other and legitimate reasons not to let banks and governments monitor your spending pattern, like protecting your informational and decisional privacy. Regular media publications about data breaches at companies or institutions through which privacy-sensitive information can be exposed or misused by criminals will make many feel uncomfortable when they have to leave their identification data online.
Due to the blockchain technology, cryptocurrencies cannot be counterfeited, thus achieving a high level of security. Once you have converted your money into cryptocurrency, you are the only one who can manage it. No one will be able to block or confiscate your money once it is in crypto. The combination of advanced cryptography and decentralization provides high end blockchain security, making it extremely difficult for hackers to steal, tamper with, or gain control over cryptocurrencies.
Decentralization is arguably the most important feature of blockchains and the biggest reason people are so excited about them. Decentralized means that the database is distributed among its users and thus not controlled by a central authority or within a specific area. Blockchains give us the opportunity to be freed of oppressive, unpredictable and untrustworthy authorities and return power to the people. In the case of cryptocurrencies, the aim is to redistribute power from governments and central banks to the people.
Cryptocurrency is superior to our current methods of doing things in a number of ways. Not so long ago we paid for groceries with cash. Nowadays many people pay with pin using their smartphone. So we can say that electronic money is already well established and crypto is simply a step further on the same path.
Cryptocurrencies give people better ways to handle their finances without using banks, which will eventually become obsolete. Within logistics, for example, blockchain is used to share crucial information about goods to be transported within the chain of customers and other stakeholders. And blockchain makes it possible to secure, enhance and accelerate payment transactions, thanks to its built-in authorization and
verification mechanisms. Almost everything we have achieved today will be enhanced with blockchain technology, meaning it is only a matter of time before cryptocurrency gains such a foothold in the wake of the advancing blockchain applications that the major institutions that dominate today's markets will be overthrown.
With their ability to connect individuals without intermediaries, cryptocurrencies enable people to conduct business and collaborate in ways never thought possible before. For example, smart contracts are one of the most promising innovations introduced by cryptocurrency that gives people a fast and automatic way of doing business.
We have seen that the Internet has removed barriers between countries and cultures and enabled an interaction between countries that was impossible in the past. If cryptocurrency is fully adopted, further integration is obvious. We can say where the developers of a cryptocurrency are located, but once the cryptos have been launched, it is impossible to determine where they are due to the decentralized nature.
Whether their users live in America, Europe or Asia, no matter where they are, anyone can use them.
Wherever they are on the planet, cryptocurrency allows for a seamless transfer of value between individuals. It is virtually impossible to achieve the same things without cryptocurrency.
So far, we have insufficiently developed in the world the enormous potential of brainpower that is stored in third world countries. I argue that cryptocurrencies will lead to greater inclusiveness of poor countries, as I showed in section 5.4. People in those countries will gain access to the financial system, which will improve their living conditions and therefore more and more people will have access to education. El Salvador and the Central African Republic are the first countries to recognize and embrace the potential of cryptocurrencies, and there is no reason to believe that not many more third world countries will follow suit.
There are always those who are the first to adopt, understand and use new technologies and pave the way for those who wait a little longer. In recent decades we have seen the rise of the fax, e-mail and mobile phone. Some took advantage of it immediately and others resisted it for years, but eventually gave in to the new possibilities. We have seen the same pattern with every new technological invention and there is no reason to believe that cryptocurrency will be exempted.
Blockchain technology enables real-time recording of digital records of just about anything. Billions of smart things in the physical world can sense, share important data, react and communicate about everything from protecting our environment to managing our health and writing it in a public ledger. A digital settlement is then the final piece that business, the economy and society need.
States usually have only three ways to pay their bills both in times of war and in peace: they can tax, they can borrow and they can print. And states can print bank notes, but they cannot print cryptocurrencies.
This will lead to countries no longer being able to print money to pay for wars and therefore wars will no longer be fought on the battlefield, but in cyberspace. It gives countries the ability to inflict the greatest
possible damage on the enemy with little risk for casualties on their own side.
And finally the problem of supervision. Until now, financial supervision has been top-down, i.e. the government controls the central bank, which in turn instructs the banks to supervise clients and their accounts. Banks must know their customers and report unusual financial transactions to the Public Prosecution Service. With crypto, transactions are peer-to-peer and banks are no longer involved. The EU is working on a new model of supervision that stimulates innovation on the one hand and protects consumers on the other. With the MiCA arrangement, the exchange platforms must monitor those who hold a cryptocurrency account with them. These exchange platforms are private parties, so supervision in the financial sector will change from vertical supervision to a mix of vertical and horizontal supervision.
Surveillance in one way or another is inevitable, but also desirable and in the best interest of the individual.
Horizontal supervision by a private party, however, provides a completely different experience than supervision by an all-powerful government.
All together, the decentralization that eliminates middlemen, the increased privacy of users, the end of the banking system, the seamless transfer of value worldwide, the opportunity of improved living conditions in third world countries that can unleash the enormous potential of brainpower, the inability of states to printing money for warfare and a more horizontal surveillance are the reasons why cryptocurrencies will change the world.
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