As cryptocurrencies become more widely used and their benefits become better understood, government affairs professionals will need to be ready to navigate this technology in the coming years. However, because blockchain and cryptocurrency are relatively new technologies, there are many misconceptions about them.
According to Anne Warner, general counsel at Algorand, most of these myths are “rooted in fear.” Warner was part of a panel of cryptocurrency experts who discussed some of these myths and the truth about the technology at a live FiscalNote event. Here are some of the key points from their conversation.
The most recent trend, however, is the blockchain game creation service. In-game items such as blockchain development services, graphics, symbols, tracks, and a variety of others can all be included in blockchains.
On the other hand, each rising star brings with it a flood of responses. This is what we’ll discuss, as well as all the blockchain myths you should be aware of.
It can also safeguard the uniqueness of the sophisticated resource. Which is why it is kept hidden because of its authenticity. Thanks to advancements in blockchain technology and Blockchain development services, they have become almost impenetrable.
1: Cryptocurrencies and Blockchain are the Same
Without using cryptocurrencies, any set of transactions that need to be securely verified and stored can be put on the blockchain. Colombia, for example, used a blockchain-based system to track COVID-19 vaccinations across the country recently.
To explain this, Warner uses the analogy that blockchains are to cryptocurrencies what the internal combustion engine is to cars. She explains, “The engine powers the car, but it can also power locomotives, planes, and leaf blowers.” “Blockchains are the backbone of cryptocurrencies, but they can also power a vast and growing number of other applications.”
2.Every blockchain works in the same way.
There are three basic types of blockchain, each with its own set of advantages and disadvantages — some are greener than others, some are more expensive, and some are more decentralized.
According to Jared Favole, senior director of communications and policy at Circle, the differences between blockchains make it difficult to regulate them. “It’s critical not to judge the industry based on one blockchain or project,” he says. “It’s a common myth we encounter when speaking with policymakers.”
Favole says he approaches this problem by assisting policymakers in understanding the various ways blockchains work and the characteristics each one possesses, as well as the technology’s rapidly changing nature. “You can criticize the industry in its current state, but you can’t completely judge it,” he says. “There are so many novel and new things to tackle from a legal, compliance, regulatory, and technological perspective when we’re thinking about creating regulations.”
3: Blockchain can’t be used to impose restrictions.
Another myth is that by using blockchain to power financial transactions, you lose the ability to impose controls like anti-money laundering (AML) and know your customers (KYC). Institutions are often hesitant to use blockchains because of their “public and permissionless” nature, according to Warner. “However, the truth is that modern blockchains can be implemented in such a way that access to them requires permission and that controls can be imposed.”
According to Warner, the blockchain is an algorithm on which people can build applications. Controlling access to the blockchain can be done by any entity.
4: Criminals Use Cryptocurrency and It Can’t Be Tracked
A common misunderstanding about cryptocurrency is that it is only used by criminals and that it is impossible to track. This is simply untrue, according to Chainalysis’s head of public policy, Salman Banaei. “Most crypto activity takes place on open and transparent blockchains,” he says, “where every transaction, wallet, address, and balance can be tracked in real time.”
Due to the open and transparent nature of the blockchain, illicit actors must “calculate the high risk of detection as well as the high risk of seizure,” as Banaei points out. “As more cases are successfully resolved — either with seizures or with the perpetrators being successfully prosecuted — we’re seeing a decrease in illicit activity.”
Illicit activity has decreased in recent years as blockchain experts improve enforcement capabilities and law enforcement becomes more aggressive in this space. Banaei is optimistic that legislators and regulators will recognize this and begin to actively embrace this technology due to its ability to detect and prevent illegal activity.
5: Other Industries Cannot Use Crypto
According to Lisa Ledbetter, partner at Reed Smith, there is a misconception that cryptocurrency can’t be used by a wide range of industries and that its regulatory perimeter is fixed. However, the world’s largest banks are investing more money in cryptocurrency and blockchain companies, and these technologies are being adopted by a wider range of industries.
According to Blockdata, a market intelligence platform for blockchain technology, 55 percent of the world’s top 100 banks have crypto and blockchain exposure. These financial institutions are investing in digital currencies and blockchain, either directly or indirectly. “We’re seeing more investment, we’re seeing more custody services” from large organizations, as well as more industries interested in cryptocurrencies, according to Ledbetter.
Last Thoughts
Finally, in light of the current free-for-all meetings. The expansion of blockchain innovation in the near future is essentially observable. While blockchain development services are still in their infancy and comprehension is difficult, it is critical to concentrate on blockchains and their key concepts.
