Cryptocurrency seemed to come out of nowhere, and now it’s changing the way the world does business. Many people are wondering if they should use it or invest in it. Businesses are weighing whether they should accept it as payment. We’re all wondering if ‘crypto’ is the future.
Is Cryptocurrency Going Mainstream?
With so many questions swirling around the topic of cryptocurrency, Rissa Reddan invited Rachel Cannon, partner at Steptoe and Johnson LLP, to join us on our Data Dialogues podcast to help separate fact from fiction. Rachel practices white-collar criminal defense and litigation, with a focus on the regulatory aspects surrounding cryptocurrency.
Reddan began the interview by asking, ‘Who is using cryptocurrency and why?’ Her response: Who isn’t?
“You see all kinds of service providers accepting payment in cryptocurrency. Steptoe, for example, accepts payment in cryptocurrency. You see mainstream consumer goods accepting payment in cryptocurrency. You can go to overstock.com and buy things in cryptocurrency. A lot of the newspapers you can sign up for subscriptions in cryptocurrency. You can go to Subway and pay in cryptocurrency. So, it really is kind of becoming more and more mainstream,” Rachel said, adding, “We don't think of cryptocurrency like we think of our credit cards or our checkbooks, but I think we're headed in that direction.”
Listen to our podcast for the full interview.
What are the Risks?
There are risks associated with cryptocurrency, as with any form of currency. Rachel tells clients they need to take a holistic look at their business; what products or services they are selling as well as what they want to do with cryptocurrency and how they plan to accept it.
Will I Get Hacked?
One risk businesses are concerned about is hacking.
“Because cryptocurrencies are stored on the blockchain, which is kind of like the digital ether, you must be very careful about hacking. Unless you've got the right kind of system set up at your company, or you're working with a reputable exchange who has a secure wallet, people who hold and carry and transact in cryptocurrencies are always vulnerable to hacking,” she said. “But of course, everybody's vulnerable to hacking, even if you're not dealing with cryptocurrencies.”
Is it Used for Criminal Activity?
Another concern is that cryptocurrency can be used by criminal enterprises, most often to disguise the source of funds in money laundering schemes. Rachel said those criticisms are fair.
“That's why we see the Department of Justice creating a cryptocurrency task force, for example, to combat those problems. But the fact of the matter is most money laundering is done with regular money -- the kind that you get out of a bank, not with cryptocurrencies,” she said.
“And as cryptocurrencies have evolved, and as people have begun to understand how they're used and the compliance risks associated with them, we're developing better tools to prevent them from being used in nefarious ways,” Rachel explained.
Is it a Fad?
Crypto isn’t going away anytime soon, Rachel predicts. She said Americans in their 40s, 50s, 60s, and older struggle to find value in cryptocurrency because of our stable government and economy.
“The U.S. dollar isn't subject to wild swings and inflation. Americans are confident that whatever political party is in power, when we put our money in our bank, we don't worry that party's going to swoop in and take it. So, for us it seems kind of ridiculous to have an alternative money system,” she said.
Additionally, she said cryptocurrency is a natural progression for gamers and those who operate in the metaverse.
“When you have these young gamers and techies who are very used to the idea of virtual money, it's easy to understand why they would want to use virtual money in their day-to-day lives. And for that reason, I think that's just going to continue to be a driving force to fold cryptocurrencies into the mainstream, that entire generation,” Rachel explained.
A Way for Suppressed Populations to Transact Globally
Another reason why cryptocurrency is gaining popularity is that it opens the door to people living under traditionally repressive governments. It gives them a way to participate in the global economy, and that is why some governments are banning cryptocurrency.
“What repressive governments all over the world are seeing is that they're losing control through things like cryptocurrency because again, people don't want to be excluded from life by repressive governments. And so, they're finding ways around that. And one way is through cryptocurrency,” she said.
Listen to our full interview or explore past episodes of Data Dialogues.