Crypto has not had much of a banner year for most of 2022. If any of the recent turbulent events are any indication, the call for more protective safeguards for consumers and investors alike is in order.
Consumer trust is at an all-time low when it comes to cryptocurrency. Many dubbed 2022 as a “crypto winter,” due to the malpractices that crypto exchanges have engaged in. With the very public fall of FTX, opponents of digital currencies have been quick to chime in, solidifying their stance that the crypto industry offers nothing more than rampant fraud.
Crypto is Bad For the Environment
According to a recent Forbes article, crypto, blockchain, and sustainability may be somewhat of a contradiction.
There’s a large amount of energy consumption required to run a blockchain. In fact, blockchains “currently account for .58% of global electricity consumption.” What’s more, in order to mine Bitcoin, it takes roughly the same amount of energy as the U.S. federal government.
Luckily, Ethereum has stepped up by transitioning from “Proof-of-Work,” which is an energy intensive mining process, to “Proof-of-Stake,” significantly reducing its carbon footprint. The crypto community has been keen on looking into more greener types of energy.
Tougher Verification Methods Ahead
With greater incidences of fraud and cyberattacks, financial conduct authorities as well as governments have moved forward with establishing critical boundaries. Consumers are also demanding that more be done to protect them and their interests. Therefore, you will see more of them choosing exchanges with more stringent regulations.
In a separate article from Fintech Magazine, Michael Ramsbacker, CPO of Trulioo, an online identity verification fintech said:
“Our own research last month found that 83% of crypto users said crypto companies should be doing more to reassure and protect customers. Against this backdrop, I think it will increasingly be a case of the market deciding how the crypto sector recovers and the direction it takes going forward. I predict that we’ll see mainstream crypto investors voting with their wallets and favouring platforms (and jurisdictions) that are embracing, rather than trying to escape, regulation.”
Build Back Better
So what lessons can be learned from crypto’s free fall from the prior year? Trust needs to be rebuilt. More robust regulation, greater transparency, and accountability are great places to start.