Cryptocurrency’s Lost Promise: Can It Still Deliver on Financial Inclusion?
Remember when cryptocurrency was all the rage and seemed like it could be the key to a more inclusive financial world?
Well, in the pre-FTX era, I was knee-deep in researching and reporting on the captivating world of blockchain technology. I was intrigued by its potential to bring financial prosperity to all, especially those left out by traditional economic systems with its deep-rooted biases.
But let’s fast forward to today. The cryptocurrency market has taken quite a tumble, casting a long shadow over that once-shining narrative. Even two crypto-friendly banks, Silvergate Capital Corp. and Signature Bank, met their demise this year, adding a layer of complexity to this unfolding drama.
Adding fuel to the fire, in our pursuit of this financial frontier, we’ve allowed the same old voices to dictate its direction, straying from its original intent. The core mission of cryptocurrency was to create a new financial ecosystem that would leave behind the inequalities of the existing one. To do that, we need diverse voices at the forefront, particularly women and people of color who understand the financial landscape’s inherent shortcomings.
The COVID-19 pandemic triggered a massive surge in cryptocurrency adoption. Historically, low-interest rates encourage borrowing and speculative investments in high-risk assets. In 2021, crypto apps, trading platforms, and even crypto-dispensing ATMs popped up everywhere, making it seem like digital coin acquisition was a piece of cake.
But, as the saying goes, what goes up must come down. In 2022, we witnessed a dramatic crypto crash that led to huge losses and insolvencies. Cryptocurrencies are mainly unregulated and lack protective mechanisms like deposit insurance, leaving them vulnerable to fraud, hacking, and various schemes.
Still, it’s fascinating to note that despite these challenges, a significant number of Black, Hispanic, and Asian American adults in the United States, roughly around 20%, dabbled in cryptocurrency through purchases, trades, or usage. The allure of peer-to-peer transactions without banks or government involvement is undeniable.
Let’s talk about a unique player in this game—OnlyFans. This platform empowers creators and gives them financial opportunities, which is especially crucial in the adult entertainment industry.
Nearly two-thirds of those working in this industry have lost access to their bank accounts or other financial tools. According to data from the Free Speech Coalition, almost 40% had their accounts shut down in the past year. This glaring issue emphasizes the need for financial services that operate outside the judgmental gaze of traditional banks.
The buzz began when news broke that OnlyFans’ parent company, Fenix International, invested $20 million in Ethereum between 2021 and 2022. Naturally, this piqued our curiosity about whether OnlyFans planned to use cryptocurrency as a payment option for its creators.
However, Sue Beeby, Chief Communications Officer at OnlyFans, clarified their stance. Those Ethereum holdings were diversified as part of their parent company’s working capital, unrelated to creator operations. Sue emphasized, “The anonymity associated with crypto means we are not planning on implementing crypto as a payment method on OnlyFans.”
Their cautious approach is understandable, given cryptocurrency’s wild price swings and security risks. Many companies, including OnlyFans, have reservations about fully embracing them.
But there’s a bright side to this story. Crypto expert and advocate Tyrone Ross highlights the advantages of cryptocurrencies regarding financial inclusion. While they may not offer complete anonymity, they provide privacy and security in transactions. The public ledger can be traced, but the private key, like the keys to your car, remains essential for transaction authorization, offering protection and confidentiality.
And let’s remember the recent move by PayPal, which announced that its dollar-denominated stablecoin is available on Venmo. This underlines the growing importance of digital assets in our financial landscape.
Of course, regulatory concerns loom large, and figures like Maxine Waters are pushing for a robust federal framework to govern digital assets, especially stablecoins. Without proper oversight, consumers could be exposed to unsavory characters in the crypto world.
There’s a call for bipartisan unity in this complex landscape as we navigate the cryptocurrency and fintech juggernaut. Regulators and policymakers have the daunting task of balancing innovation and safeguarding interests, a challenge as old as time.
So, as we continue on this journey, let’s remember the original vision of Satoshi Nakamoto: Access to financial inclusion, freedom, and empowerment.
It’s not just about riches; it’s about giving everyone, regardless of their background, the same access to banking. I’m betting on the next wave of movers and shakers who will rise to the occasion and make that vision a reality.
Check out the original article on my Forbes contributor page for the whole story and more insights. Happy reading!