Jackson Palmer, co-founder of Dogecoin,knocked the cryptocurrency industry and stated that he would no longer participate in it. In a series of tweets, he explained his decision, calling cryptocurrency “an integrallyhyper-capitalistic, right-wing, technology.”
It’s “built primarily to intensify the wealth of its supporters through a mixture of tax avoidance, reduced controlling oversight, and enforced scarcity artificially,” he added.
Palmer isn’t the first, but he’s a vocal critic who has once again focused attention on the dark side of cryptocurrency and whether it has the potential to become a legal tender, despite the fact that few countries are moving in that direction.
At a time when the cryptocurrency craze has swept not only new and inexperienced investors, but also experienced ones, governments around the world have expressed their displeasure and called for tighter currency regulations.
Governments have repeatedly cautioned investors to carefully consider the currency’s high risks before investing in it.However, given the rate of growth in the cryptocurrency markets over the last few years, the warnings appear to have gone unheeded. According to Coinmarketcap.com, the market capitalization of cryptocurrency was over $1.2 billion eight years ago and is now $1.2 trillion, a 1000 percent increase.
Let’s take a look at the negative aspects of cryptocurrencies and the problems they cause:
Serves the rich?
Cryptocurrency supporters have defended it by claiming that it is decentralised because it is based on a peer-to-peer blockchain system. Billionaires, companies, and investment funds own a significant amount of cryptocurrency, and their decisions influence price volatility.
Palmer slammed the claim, claiming that “despite claims of decentralisation, the cryptocurrency industry is dominated by aninfluential cartel of wealthy personalities.” He goes on to say that they’ve “evolved to incorporate several of the similar institutions tied to the present centralised financial system they happened to be supposed to replace.”
He also believes that cryptocurrency was “purpose built” to make “profiteering more efficient” for the wealthy and powerful while leaving the “vulnerable” unprotected.
The blockchain technology that distinguishes cryptocurrency and gives it a perceived superiority status is also a liability in terms of liquidity. The process of updating and validating mutual agreement-based transactions in multiple blocks may take some time. Traditional forms of currency are faster in comparison.
JP Morgan stated that a huge portion of Bitcoin use to be locked in illiquid assets, with 90% of them not changing hands in more than a year, as a “significant and rising” portion is held by wallets with low turnover, Bloomberg reported, following El Salvador’s decision to adopt Bitcoin as legal tender. The global investment bank pointed out also other challenges comprisingscepticism and high volatility among the people.
Absences of regulation
Unlike other trading options, no regulatory body has yet been established to act as a watchdog for cryptocurrency. As a result, if miscreants use it on the dark web, there is almost no accountability. Large amounts of cryptocurrency have been lost as a result of the owner’s death, a misplaced key, an unintentional bug in the system, or simply by accident, with no one to turn to in such situations.
Palmer agreed, saying that cryptocurrency is “taking the worst parts of capitalist system of these days (such as fraud, corruption, and inequality) and making use of software to strictly limit the use of interferences (such as audits, taxation, and regulation) that use to serve as safety nets or protections for the average person.”
“Have you forgotten your savings account password? It’s your fault. Have you fallen victim to a con? It’s your fault. Market manipulation by billionaires? They’re absolute geniuses. This is the type of dangerous “free for all” capitalism that cryptocurrency has unwittingly enabled since its inception.”
Aids illegal deeds
Cryptocurrency facilitates illegal activities such as money laundering and other illegal activities because it is unregulated. According to a study by the Society of Financial Studies, about a quarter of bitcoin users engage in illegal activity.It goes on to say that bitcoin is involved in around $76 billion in illegal activity per year (46 percent of bitcoin transactions), which is comparable to the size of the illegal drug markets in the United States and Europe.
It stated, “By offering a digital, anonymous, method of payment, bitcoin happened to did for darknet marketplaces that PayPal did for eBay—offer a scalable, reliable, and convenient payment mechanism.”
Several leaders and studies have expressed concern about cryptocurrency mining’s carbon footprint, which involves creating new coins using multiple computers that consume electricity to analyse and compute complex mathematical equations. The majority of the electricity used comes from fossil fuels.