For the first time in modern history, our civilization is on the verge of a new concept in monetary transactions with cryptocurrency. Cryptocurrency could be hugely disruptive to many industries, and could completely change the money transfer services industries, but we need trust to be at the cornerstone before it can gain wide acceptance and be legitimized. The historical concepts of trust, integrity and the validation of people and identities will also need to evolve.
Cryptocurrency is quietly skyrocketing, with $30 billion transactions taking place daily. The production of this new digital currency is turning physical currency on its head. Cryptocurrency is innovative and bizarre, presenting new challenges and with still much to learn about its structure and legitimacy. With no central authority or central bank to oversee cryptocurrency, we are amid a gold rush—we are mining for gold with few rules and many ups and downs. Current blockchain systems don’t require personal or corporate identities, so where does that leave us with trust and identities? Especially as our real-world technology society includes cyberthreats, bad actors and dishonesty. We need to redefine how we determine trust. We need better identity management and encryption technologies in place for cryptocurrency to move to the next level.
With the rise of cryptocurrency, how we perceive the notion of trust is changing. Will cryptocurrency change our perception of trustworthy persons? Do we need to redefine and profile how we investigate and control personnel with digital currency? With digital currencies easier to steal, will more insider theft occur?
As a society, we have always determined fiduciary trust based on thousands of years of physical currency experience. It’s rare that a new currency is born, and almost unheard of for a currency to have value with no pledge behind it—for example, sovereign commitment of a government, gold, resources, etc. Cryptocurrency is turning physical currency on its head.
Why Regulation and Identities Are Needed to Legitimize Cryptocurrency
Regulation may be the only thing that moves cryptocurrency out of the speculation arena and into commerce. Business and individuals need confidence that a currency doesn’t lose half of its value overnight. Identity management and encryption technologies must be matured and deployed to protect these currencies.
Financial institutions are highly regulated and banks know that employees need to be supervised and processes implemented to manage and audit money handling (bank vaults, balance sheets, registers, receipts, etc.). Banks also know that they can place $5 million in cash in a bank and, due to the size and volume, a “trusted” employee can’t walk out with it in a bag. Or, if we place money in a home vault or bury gold, the burden to find it and steal it is pretty steep.
Consider the DEA investigation of Silk Road on the Dark Web. After Bitcoin was seized in the investigation, the DEA lead agent and a Secret Service agent then stole the currency from the agency. Did this occur because the digital currency was new, misunderstood and hard to trace? Or was it because no large bags of currency hard to be removed from an evidence locker? At the time of the sentencing, the value of the Bitcoin stolen by the agent would have been worth more than $11 million. How do we determine if a new level of vetting, trust and concepts are needed to place trust in others?
We are now experiencing a global shift with potentially life-changing impact: digital currency. With the rise of cryptocurrency, how we perceive the notion of trust is changing. Will cryptocurrency change our perception of trustworthy persons? Do we need to redefine and profile how we investigate and control personnel with digital currency? With digital currencies easier to steal, will more insider theft occur?