Want more security and privacy? Use Cryptocurrency
During the past year, Bitcoin has captivated the world.
With wild fluctuations in price, the world’s most well-known cryptocurrency has made many investors rich by trending exponentially upward against the U.S. dollar. And while Bitcoin has had issues, it also has potentially sparked a revolution that could change transactions forever.
Cryptocurrencies like Bitcoin will offer consumers of the future several conveniences that paper currencies could never offer. Cryptocurrencies can remove the need for a wallet because exchanges can be made through a smartphone or a chip. The new currencies are also international — a global society with widely accepted digital currencies eliminates the need to pick up local money while traveling between countries.
Last year, a federal judge ruled that cryptocurrencies can be regulated like commodities.
“Virtual currencies are ‘goods’ exchanged in a market for a uniform quality and value,” Judge Jack Weinstein wrote in the decision. “They fall well within the common definition of ‘commodity.’”
Will cryptocurrencies ever completely eliminate fiat money? Possibly, eventually, but the time frame for that is anyone’s guess. Government regulation will likely make large businesses more comfortable accepting it. But the trend is irreversible: cryptocurrency is going to become steadily more prevalent.
So, what does this mean for consumer financial security and privacy in the meantime?
People that don’t like to carry large amounts of cash — a large majority of the population — opt for credit cards for day-to-day transactions. Fraud, however, is a daily problem facing the credit card industry and its carriers. The Nilson Report projects that by 2020 there could be $12 billion in credit card fraud in the United States alone.
The risks of identity theft and fraudulent charges aren’t the only risk to credit holders, though.
Credit card users aren’t offered digital privacy when making purchases. Every person that uses a credit card has an existing digital profile, and each purchase is a piece of a puzzle that tells advertisers all about them.
Google uses the data to see what type of ads each consumer has seen, and which have resulted in a purchase, allowing the digital giant to tailor ads for users in the most effective way possible.
While cryptocurrencies present their own risks if networks are penetrated, they make it far more difficult for advertisers to build a digital profile on someone.
Cryptocurrencies have also attracted criminal organizations due to the difficulty law enforcement has in tracking them, which can give regular consumers who worry about privacy several advantages.
As of now, it’s far harder for companies like Google to make in-depth on-line profiles of users from cryptocurrency purchases. There isn’t an account number that is somewhat easy to steal — a number that can give someone full spending privileges on your card until you realize the account has been compromised.
While the ease of transaction needs to be improved from its current form, and the somewhat lawless nature of the markets need to improve, cryptocurrencies have the potential to improve modern financial markets.
A majority cryptocurrency marketplace may be far off in the future, but, if shaped correctly, it has the potential to allow users significantly more anonymity than credit cards currently do.