The Draft Ethiopian Law of Security Interests 2018

The Misinformation Campaign for Cryptocurrencies: Banking the Unbanked

The Misinformation Campaign for Cryptocurrencies: Banking the Unbanked

Despite my wish for the original idea of cryptocurrencies to work, I can't help stating that the cryptocurrency marketing follows a simple rule. By the hook or by the crook, convince people to buy the idea. Unfortunately, this has been done mostly through unexamined hyperbolic claims and misinformation.

Former Greek Finance Minister Varoufakis stated “There is a Bitcoin aristocracy, the Bitcoin early adopters, who accumulated very cheaply Bitcoins from the beginning. They have every reason to talk this thing up and lure people into like a Tulip-like mania or a pyramid, making extravagant claims[…] to (open and use a new Bitcoin ATM). This was all just hype.”https://www.cryptocoinsnews.com/bitcoin-debate-andreas-antonopoulos-vs-greek-finance-minister/.

The propaganda is advanced not only by early developers and their surrogates known as promoters or by the startup companies but also by the media. One of the misinformation about cryptocurrencies has been that cryptocurrencies would bank the unbanked. 

https://www.foreignaffairs.com/sponsored/bitcoin-unbanked. Forbes magazine published a piece titled "How Bitcoin Will End World Poverty" https://www.forbes.com/sites/steveforbes/2015/04/02/how-bitcoin-will-end-world-poverty/#3089ce222a5a, an idea that is echoed by CNBC in its report that went "Can Bitcoin Help the World's Unbanked?https://www.cnbc.com/2015/07/05/can-bitcoin-help-the-worlds-unbanked.html. 

But let's face it, the claim that cryptocurrencies would bank the unbanked was clearly bogus from the very outset and is proven to be false now. The so-called the unbanked are members of the society who have no access to financial services such as credit card or debit card. https://www.dashforcenews.com/cryptocurrencies-like-dash-help-poor/. Cryptocurrencies were never meant to be and will never be for them. 

To have access to any cryptocurrency, a user must have a bank account, unless the user is computer scientist in which case he/she needs a well-functioning or a powerful computer and the skill to engage in solving complex cryptographic problems. In which category do the unbanked fall? In the category of people who have bank account and can purchase cryptocurrencies or in the category of computer scientists who can mine cryptocurrencies and earn them with no need for bank account? There is a third way of acquiring cryptocurrencies, which is through transfer made by someone in exchange for physical cash or other  good of value in which case the acquirer keeps the cryptocurrency on the blockchain concerned but this is also an expensiveness process and usually involves illegitimate methods and objectives. 

As of March 24, 2018, on Coinbase, one of the popular cryptocurrency exchanges, 1 Bitcoin is worth about 6,900 Euros, 1 Ether is over 400 Euros, 1 Bitcoin Cash is over 700 Euros and 1 Litecoin is over 120 Euros. Which one of these is affordable to the poor people dabbed as the unbanked and how would they acquire them? 

The mainstream media that the people consume their news from and form their opinions based on including Forbes magazine provide a platform for the misinformation. The Financial Times which is held as the darling of global financial news and opinions  published a report titled "Bitcoin, blockchain and the fight against poverty", highlighting Hernardo De Sotos' initiative to use blockchain to register informal property rights.https://www.ft.com/content/60f838ea-e514-11e7-8b99-0191e45377ec. Consider that readers are being led to believe that the complex problem of poverty is all of sudden solved by a complex and experimental digital technology whose use is highly dictated by self-interested industry experts who want to get money from the gullibles without actually delivering a product. 

It is the belief in the unconditional goodness of cryptocurrencies and the blockchain technology without questioning them or asking if they have  a realistic chance of delivering on the exaggerated claims and promises  and possibly the false hopes created by the Financial Times and other media culprits that led consumers to invest massively in an economy which is clearly a fraud. One simply needs to look at the number of so-called Initial Coin Offerings(ICO) that proliferated over a short period of time, raising money from the public using deceptive advertising practices and making promises that are never delivered and have no likelihood of being delivered and with no tested product prototype.

Thanks to the fraudulent mainstream media and academic journals, the make believe continues.

If interested in reading a critical perspective on the legal regulation of cryptocurrencies, read Regulating Decentralized Cryptocurrencies.  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3142317.