Is the end of crypto winter near?
Crypto hasn’t had much of a banner year for most of 2022. If some of the recent turbulent events are any indication, the call for more protective protections for consumers and investors alike is warranted.
Consumer confidence is at an all-time low when it comes to cryptocurrency. Many called 2022 as a “crypto winter”, due to the malpractices that crypto exchanges have engaged in. With the public fall of FTX, opponents of digital currencies have been quick to chime in, solidifying their position that the crypto industry offers nothing more than widespread fraud.
Crypto is bad for the environment
According to a recent Forbes article, crypto, blockchain and sustainability can be something of a contradiction in terms.
A large amount of energy is required to operate a blockchain. In fact, blockchains “currently account for 0.58% of global electricity consumption.” Also, to mine Bitcoin it takes about the same amount of energy as the US federal government.
Fortunately, Ethereum has stepped up by moving from “Proof-of-Work”, which is an energy-intensive mining process, to “Proof-of-Stake”, which significantly reduces its carbon footprint. The crypto community has been keen to look at several greener types of energy.
Tougher verification methods ahead
With greater incidences of fraud and cyber-attacks, financial conduct authorities as well as governments have moved forward to establish critical boundaries. Consumers are also demanding that more be done to protect them and their interests. Therefore, you will see more of them choosing exchanges with stricter rules.
In a separate article from Fintech Magazine, Michael Ramsbacker, CPO of Trulioo, an online identity verification fintech, said:
“Our own research last month found that 83% of crypto users said crypto companies should do more to reassure and protect customers. Against this backdrop, I believe it will increasingly be a case of the market deciding how the crypto sector recovers and the direction it takes going forward, I predict we’ll see mainstream crypto investors vote with their wallets and favor platforms (and jurisdictions) that embrace, rather than try to escape, regulation.”
Build back better
So what lessons can be learned from crypto’s free fall from the previous year? Trust must be rebuilt. More robust regulation, greater transparency and accountability are good places to start.
