Expert Says, Cryptocurrency May Be More Centralized And Less Anonymous As You Think

Anonymity

One of the main benefits of cryptocurrencies like bitcoin was their anonymity, which allowed users to transfer money without the involvement of a bank or the government.

However, according to one expert, the opposite is actually true, and we are actually witnessing some degree of centralization.

Eswar Prasad, an economist at Cornell University and the author of “The Future of Money: How the Digital Revolution is Transforming Currencies and Finance,” said on Yahoo Finance Live that “we could end up rather than having decentralization and more anonymity being led to a world where big corporations. And perhaps central banks, have even more visibility into our financial transactions.”

Prasad claimed that as central banks consider issuing their own digital currencies, the cryptocurrency industry may become more centralized. He claimed that digital currencies issued by central banks could weaken the case for many other private cryptocurrencies.

Cryptocurrency May Be More Centralized

According to Prasad, central bank digital currencies may end up providing governments or central banks acting as their agents with tools for monitoring both the economic and financial lives of their citizens.

Additionally, it goes beyond the potential intrusion of the government. Stablecoins are now more often issued by specific issuers and less frequently on decentralized platforms, according to Prasad.

Stablecoins, which are fiat currencies are backed by fiat currencies, could become very popular in the future if they are built on top of already established social media platforms.

More Centralized Crypto Being Less Anonymous

He claimed that even though setting up your own trading platform account and digital wallet, it gives you a little bit more anonymity than doing so on a centralized exchange. It’s still very challenging to conceal your identity if you use these cryptocurrencies frequently.

Anonymity
Anonymity

He claimed that the main benefit of these digital currencies was no longer anonymity. The relative lack of anonymity in crypto has a benefit, in Prasad’s opinion. He insisted that it indicates that the use of bitcoin for nefarious transactions has decreased over time. Prasad emphasized that if bitcoin is used extensively or to buy real goods, the FBI will be able to track transactions . And can link digital identities to real identities.

Crypto , Becoming More Centralized

As central banks look to issue their own digital currency, Prasad warned that cryptocurrency may become more centralized. He continued by saying that digital currencies issued by central banks could weaken the case for many other private cryptocurrencies. This might include online payment systems.

With cryptocurrency, our financial transactions may be more transparent. Furthermore, it is doubtful that only the government will attend. Stablecoins are now more often issued by specific issuers and less frequently on decentralized platforms, according to Prasad.

Since stablecoins are backed by fiat money, he said, “one can imagine a world in which they are of stable value, gaining a lot of traction if they are built on top of existing social media platforms or commercial platforms, such as Amazon or PayPal.”

If you use these cryptocurrencies frequently, keeping your identity afloat is still important and very challenging too. He claimed that the main benefit of these digital currencies was no longer anonymity. However, expert says that the opposite is true and that we are actually witnessing some centralization.

we might, somewhat paradoxically, create a world where big businesses and perhaps central banks enjoy greater anonymity than we do. Even more information about financial transactions is visible.

Prasad asserts that there is a benefit to cryptography’s relative lack of anonymity. The use of bitcoin for nefarious transactions has decreased, he continued, compared to earlier. And can connect digital identities to real identities, but much more challenging than some people think.

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