We regularly see stories of ransomware attacks that demand payment in cryptocurrency or hacks of crypto exchanges where millions of coins are stolen, as well as “rug pulls” where unscrupulous founders liquidate investor holdings. We hear of how cryptocurrencies and Proof of Work consensus are ruining the environment for everyone. These negative narratives are part of the crypto-space.
However, we also hear stories of efforts to empower the unbanked of the world, with efforts to spread financial freedom and equity via crypto. We hear of founders and individuals making massive donations of coins/tokens to charitable trusts. We hear of new token projects that are committed to making the world a safer and better place. We also hear stories of efforts to capture and use wasted energy production, coupled with “green crypto-mining” options resulting in net-zero carbon emissions. These positive narratives are part of the crypto-space too.
Perhaps it’s not surprising that there’s good and bad in the crypto-sphere since it reflects the good and bad in the broader world.
In an exclusive DailyCoin interview with Colin Platt, co-founder of Unifty – a multi-chain NFT infrastructure platform, focusing on the creator economy – notes that this dualistic nature of cryptocurrencies creates a dynamic tension that touches all aspects of the sector.
“Everybody likes to think that they’re doing the right thing and having incentives around money can sometimes encourage behaviors that are not what people would have done based on altruistic instincts. I think there are a lot of areas where – when designed properly – financial incentives can be a positive thing. Those incentives can drive desired behavior to a communal positive, which would otherwise be hard to achieve without that. If everybody just wanted to do the right thing, that’s great. But unless there’s this ‘invisible hand,’ to put it into Adam Smith terms that bring us to an optimal balance, which nobody really individually knows, it’s very difficult.”
Platt goes on to discuss that cryptocurrencies were originally conceived as a financial construct to benefit and empower individuals, which is a noble intention that’s not always executed perfectly. He went on to say that while cryptocurrencies can do a lot of good in the world, the very nature of digital assets themselves, combined with the Internet, creates a target-rich environment for bad actors to exploit the unsuspecting and innocent investor.
“What has shocked me, I guess, time and time again is that, in crypto, when you’ve been around this space you’re kind of conditioned to always watch your back. Everybody's out to get you, take your money and do whatever. You see it. Somebody joins the Telegram forum making grand promises and then trying to scam members or make a fake Telegram, whatever it is. So that happens a lot and you need to watch out for these things. And I think because we’re dealing with internet money, the average person generally has pretty bad operational security, it’s easy for hackers to make money out of that. That’s unfortunate.”
Platt says he’s most concerned about crypto neophytes who jump completely into space without researching or knowing what they’re investing in or what they’re doing. He says those stories are sad, it’s difficult to help new entrants who rush in and don’t realize they poured their funds or life savings into a bad project.
“And I think it kind of comes back to my previous point: all of these incentives need to be well thought out, you need to be working in the space and understand it. It’s a very difficult thing to try and do the right thing, but at the same time, you have to be kind of stoic about it, when you’re faced with stories that sound very difficult when new investors lose everything. While you want to believe everybody, not all of them are honest and you have to be very cynical about how you deal with all these types of situations, which is tough. You need to keep a solid shield around you when you work in crypto.”
Perhaps the best advice to balance this dualistic nature is summed up in the axiom “trust but verify” – as you’ll likely do much better when you verify first and trust later.
On The Flipside
- Every industry has both good and bad individuals – it’s the responsibility of every individual to do their own research before investing in any project, coin, or token. # Caveat Emptor
- If individuals increasingly fail to protect themselves from crypto frauds and scams, government regulatory agencies will be forced to deploy centralized controls over cryptocurrencies.
Watch the entire interview here: