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COVID and Cryptocurrency

gold crypto coins on credit card

The world is mobilised against COVID-19, concurrently we are thinking of the new normal post-pandemic. The trend towards e-commerce is increasing; including the adoption of digital currencies, providing strong consumer financial and privacy protections.
The preserve of encryption has been national security. Cryptography helped win the Second World War and protected communications during the Cold War. As a matter of national security, the USA did not allow cryptographic technology to be exported until 1992. Anyone using encryption was assumed to have something to hide.

In the 1990s, encryption was used in online commerce, to protect credit card numbers, passwords and other information. The commercially created encryption technology could be of use to all.

Cryptocurrencies promise to create an open financial system with global access, instant transfers, lower costs and massively improved consumer privacy protections.

In the view of US intelligence and law enforcement, widespread encryption meant privacy for terrorists, drug dealers and money launderers.

The debate about end-to-end encryption continues; now, the majority of internet traffic is encrypted, and most online look for the closed lock icon on browsers before entering sensitive information. Messaging applications like WhatsApp, Telegram, iMessage and Signal have led the way in normalising private messaging that can’t be tracked and read by third parties.

Privacy is not the norm in personal finance. Financial institutions are required to collect personal information about customers. Ultimately this information ends up in online databases, presenting an enticing target for hackers.

When bitcoin became widespread, many people incorrectly assumed that it was anonymous money. Similar to blockchain technology, a public ledger records a digital trail of every transaction is utilised. Blockchain analytics firms now help law enforcement track down criminals who thought their trails were covered. Cryptocurrency exchanges have instituted robust anti-money-laundering comparable to any bank.

Recent developments in cryptocurrency technology potentially will take consumer privacy to even higher levels, but they are expected to be controversial. Privacy coins’ such as Zcash and Monero provide cryptocurrency protocols that make every transaction untraceable. JPMorgan and other financial service providers seek to replicate these features. This shift is similar to when websites changed from HTTP to HTTPS as the global standard: it informs consumers that their information is protected by default.

Like the early internet required encryption to protect e-commerce, cryptocurrencies need privacy protections to reach their potential. Guarding against authoritarianism, data harvesting or criminal hackers; avoidance of having to collect personal data is the best way to avoid sensitive financial data falling into the wrong hands.

The enhancement of financial protection doesn’t mean an open the door to criminal activity. Law enforcement agencies have a wide range of tools available, from summoning cryptocurrency exchanges to examining currency conversions, which are likely to remain the choke points. Regulation of transactions will continue regardless of whether consumers are using privacy coins or non-custodial wallets.

The creation of the worlds leading internet companies have created a significant benefit for the US; other countries are now attempting to lure the next generation of cryptocurrency companies. Those nations thinking about cryptocurrency policy will need to strike a balance between policing, online security and privacy, innovation and economic competitiveness.

Consumers in a free society will always demand and expect reasonable levels of privacy. Our financial lives are no exception. Fortunately, cryptocurrencies can fix some of the most vexing issues in financial services. As we plan to rebuild economically after the COVID-19 crisis, we must allow these technologies to grow.

UNICEF seeks to expand its use of cryptocurrency. The charity aims to answer donor demands and provide better support to organisations globally in the fight against Covid-19. During this pandemic, conventional channels for distributing funds have become less practical; the benefit of using cryptocurrency is amplified. UNICEF claims a transfer of funds can be completed at the cost of less than $20 in under than 20 minutes.

Malicious campaigns exploiting the pandemic are growing in number. Cryptocurrency has attracted significant attention from attackers; namely; COVID-19 themed cryptocurrency scams.

At 27 July 2020, it was reported that 195 COVID-19 themed cryptocurrency scams occurred, including:

  • 91 token scams;
  • 19 giveaway scams;
  • 9 blackmail scams;
  • 14 crypto-malware scams;
  • 9 Ponzi scheme scams;
  • 53 donation scams.

More than 200 blockchain addresses are identified as associated with these scams, which have led to at least $330K in losses from 6,329 victims.

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Barry ET Harris MBE, is an independent consultant; he is a veteran of the British Army; he combines specialist operational experience with wisdom gained from extensive commercial consulting, executive and management expertise in his specialities gained in complex environments and high-risk jurisdictions worldwide.

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