What's holding back crypto from going mainstream?
Fri, 27 Mar 2020, 00:12 am UTC
Cryptocurrencies have proven to be viable assets in this time of emergency.
In an op-ed for Coindesk, Mark Blackman consults on emerging technologies after a career at Qualcomm with James Cooper, a Coindesk columnist and a professor of law at California Western School of Law in San Diego. They discussed if the unstable moment brought by COVID-19 is a chance for cryptocurrencies to go mainstream.
In a matter of weeks, cryptos have become a viable asset class and a legitimate alternative to fiat-based economies. However, although the world seems ready for it, the massive adoption is disrupted by the legal structure to regulate them, which always lags behind the technologies, itself.
“The agencies tasked with protecting consumers concerning securities, overseeing currency, and ensuring the fairness in commodities trading have been slow-footed to catch up to the workings of this complex technology,” they wrote.
“The dearth of core legal prescriptions is preventing massive adoption. Financial services, property titles, and tax accounting all require new regulations to accommodate the changing realities brought on by blockchain technologies. We need to clearly determine to what extent smart contracts can be enforced in a court of law.”
In addition, there is a need for privacy protection before the broad adoption of blockchain. Without the fundamentals in place, people would find it difficult to trust technology with their identification and money.
Aside from the legal challenges, there is the “hurdle of user adoption.” The traditional financial services offer security that crypto lacks. For instance, if the bank goes bankrupt, Federal Deposit Insurance Corporation will cover up to $250, 000 of its losses. However, with crypto asset loss, one has to endure it, himself.
“For the new world of cryptocurrencies to go mainstream, the average consumer must work through the complexity of current key management implementations. In particular, if cryptocurrencies become a truly distributed asset class, consumers should also be ready to assume their own losses through theft or user error,” they added.
The federal response to COVID-19, with both the Senate and House bills having considered a digital dollar, may speed up the mainstream acceptance of cryptocurrencies. However, it will still take time for cryptocurrencies to make a significant transformation in the world’s financial systems.
Meanwhile, Binance.US CEO Catherine Coley suggested the use of stablecoins for emergency funds because they make the process safe and fast since they can be distributed digitally.
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