Cryptocurrencies pose seven paradoxes. Firstly, they offer trust in a trustless environment, but their pseudonymous nature can facilitate illicit activity. Secondly, they’re decentralised, but mining power is concentrated among a few. Thirdly, they aim to disintermediate financial systems, but are becoming increasingly intermediated. Fourthly, they’re designed for peer-to-peer transactions, but most are held for speculative investment. Fifthly, they’re programmable money, but smart contracts can be too rigid. Sixthly, they’re supposed to provide financial access to the unbanked, but require significant technological infrastructure. Lastly, they aim to be a stable form of digital gold, but are highly volatile.
Cryptocurrencies are a new technology with potential, but they’re not without their challenges. They’re seen as a way to democratise finance, but their design and current use raise questions about their ability to fulfil their promise. Their pseudonymous nature can be exploited for illicit purposes, and the concentration of mining power could lead to centralisation. The increasing intermediation of cryptocurrencies could undermine their original intention to disintermediate financial systems. The use of cryptocurrencies for speculative investment rather than peer-to-peer transactions could limit their potential for everyday use. The rigidity of smart contracts could lead to unintended consequences. The need for technological infrastructure could limit their ability to provide financial access to the unbanked. Lastly, their volatility could undermine their aim to be a stable form of digital gold. Despite these paradoxes, cryptocurrencies continue to evolve and their future potential remains to be seen.
Go to source article: https://bankunderground.co.uk/2018/11/13/the-seven-deadly-paradoxes-of-cryptocurrency/