Challenging five common narratives about crypto and blockchain
To achieve Crypto Altruism’s mission of highlighting the good being done in the crypto and blockchain ecosystem, it is important to also challenge some of the common and negative narratives surrounding crypto and blockchain.
These perceptions create stigma around the space, which can act as a barrier to entry for some, and discourage those from the social impact sector, such as charities, non-profits, and community leaders, from engaging with the space. So, today I want to challenge some of these common perceptions and present a more positive counter-narrative.
1. Crypto is terrible for the environment
Probably the most common criticism about cryptocurrency is that it is terrible for the environment. Most of this criticism revolves around Bitcoin specifically, but for those not involved in the space, Bitcoin and cryptocurrency can be synonymous.
While there are certainly concerns about the energy required to mine Bitcoin, this is one small piece of the crypto and blockchain ecosystem, and great strides have been made in the space to ensure mining is as sustainable as possible by using clean energy sources, carbon offsets, etc. But, of course Bitcoin isn’t the only player in the game, and there are other cryptocurrencies and DeFi projects that are highly energy efficient, such as Algorand, Cardano, and Solana, among others.
At the same time, however, it is important to look at the environmental impacts of the legacy banking system that DeFi looks to disrupt. First, there of course the hundreds of thousands of bank branches and the estimated 3.5 million ATMs. Then there are the head offices in towering skyscrapers, and all the background infrastructure, such as data centres that keep the financial networks running. In a previous blog, I highlighted one study that estimated the electricity consumption of the global banking system to be a whopping 263 TWh per year, more than twice that of Bitcoin.
Although Bitcoin may face challenges related to its environmental footprint, the legacy systems that Bitcoin and DeFi are looking to replace are far worse.
2. Crypto is made up only of a shadowy, faceless group of super-coders
Recently, Senator Elizabeth Warren remarked “instead of leaving our financial system at the whims of giant banks, crypto puts the system at the whims of some shadowy, faceless group of super-coders.” This is indicative of a much larger stigma that the crypto and blockchain space is made up only of basement-dwelling, nefarious super coders.
Now, of course, those working in crypto know this is not the case, and that those involved in the crypto space, whether as developers, enthusiasts, or simply investors, come from all walks of life. Presently, the crypto ecosystem consists of:
Millions of individuals all over the world, with the top twenty countries in Chainalysis’ Global Crypto Adoption Index representing all continents but Oceania (and of course Antarctica).
Hundreds of charities and non-profits that accept cryptocurrency donations to support their social causes, including massive organizations such as UNICEF, Save the Children, and the American cancer society.
Dozens of top tier universities offering courses in blockchain and crypto including but not limited to Massachusetts Institute of Technology (MIT), Cornell University, University of California, Berkeley, Stanford University, Harvard University, Columbia University, and many, many, more.
Developers working on thousands of projects, many with a social impact focus, to help create a fairer and more equitable world.
3. Crypto is the currency of criminals
Another common criticism is that crypto is the currency of criminals. Jamie Dimon, CEO of JPMorgan Chase, the biggest bank in the US, once said “If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than US dollars.” While there have certainly been examples of crypto being used for malicious purposes, these cases account for only a tiny amount of overall crypto transactions.
One report found that 2.1% of all cryptocurrency transactions in 2019 (or roughly $21.4 billion dollars’ worth), were for criminal purposes. This number fell to 0.4% (or $10 billion) in 2020. Now, in comparison to the US Dollar, one estimate by economist Ken Rogoff (who it turns out is quite the Bitcoin sceptic) is that roughly one third of all US currency in circulation is unaccounted for, likely meaning it is either used by criminals or tax cheats. It’s hard to say specifically what percentage of that 33% goes directly to criminal purposes, but I’d venture a guess that it’s greater than 0.4%. I think this is certainly a safe bet given that the UN Office on Drugs and Crime estimates that between $800 billion and $2 Trillion is laundered globally in one year.
Can cryptocurrency be used to facilitate financial transactions in support of illegal activity? Absolutely. Does this mean that cryptocurrencies are inherently evil and should be shunned? Absolutely not, especially when other official currencies are used for criminal activities to massive extents. Criminal activity will happen no matter what financial tools exist. The problem is the criminal activity, not the currency.
4. There is a lack of diversity in the crypto/blockchain space
A common belief is that the crypto space is dominated by young white males, most of whom are speculators looking to make a quick buck. While there is certainly plenty of room to grow to ensure the crypto space is as inclusive as possible, there are many positive indicators that the crypto and blockchain space is more diverse than many expect, and is increasing its diversity at a rapid pace.
In Chainalysis’ Global Crypto Adoption Index highlighted above, the top ten countries for adoption include, in this order, Vietnam, India, Pakistan, Ukraine, Kenya, Nigeria, Venezuela, United States, Togo, and Argentina.
While one study found crypto ownership by males to be nearly twice as high as by females in the U.S., another study found that the number of women involved in the space is skyrocketing, with a 43% increase in the first quarter of 2020 alone.
There are dozens, if not hundreds of amazing groups, collectives, and projects working to promote diversity in the space through education, empowerment, and the facilitation of connections. I highlight some of these amazing organizations in a blog post here.
5. Cryptocurrencies are one big Ponzi Scheme
There have certainly been cases of scams in the crypto space, just as there have been in traditional markets. These have included rug pulls, pump and dump schemes, airdrop scams, etc. However, to make a blanket statement that all crypto is collectively one big Ponzi scheme is misguided and lacks a basic understanding of what a Ponzi scheme is. Ponzi schemes, by their very nature, require centralization, as they require someone in control who is recruiting new investors and using these new investments to pay out a return to older investors, and so on and so forth. So, to say, for example, that a cryptocurrency that is decentralized, transparent, and open source, or based on a consensus algorithm, is a Ponzi scheme, is absolutely absurd.
This belief also ignores the fact that there is not one, but thousands of projects in the space, and a diversity of investors which range from individuals with a small amount of capital, to large-scale institutional investors. Of the latter, there has been a massive inflow of capital invested recently, with $17 billion worth of capital being invested in the space from institutional investors in 2021 so far.
Cryptocurrency and blockchain, like many new phenomena, have become contentious topics of discussion, and as a result, some common perceptions and narratives have emerged that paint a negative picture of the space. However, the deeper you fall into the crypto and blockchain rabbit hole, it becomes more clear that there are so many amazing individuals and groups looking to make use of the technology for real social good. Hopefully, as a community, we can work together to challenge these false narratives, and present a fairer and more factual view of the crypto and blockchain ecosystem.
What are some other common narratives around crypto and blockchain that need to be dispelled? Tweet us at @Crypto_Altruism, we’d love to hear from you!
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