Why do governments have such difficulty regulating Bitcoin and other cryptocurrencies?

The challenge for government regulatory bodies is to issue “enforceable” regulation over crypto is it needs to cover 3 main areas which are very difficult to cover without overlapping or infringing into each other. These are privacy, security, and fraud.

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For example, in order to prevent fraud, the government needs to know more about the parties involved in the transaction so they can issue regulations to allow them to persecute an individual. If they issue a regulation to reduce/protect consumers against fraud, then your privacy will get compromised – because you will stop being anonymous and therefore less secure.

On the other hand, if you want to be able to disclose some information to X but not Y, then the current security layer in place is not adequate. If you modify the current security layer in the current blockchain implementations, it could become very cumbersome for the average user to manage and/or it will require some level of centralization which goes against the idea of a fully decentralized model.

The big challenge for the regulators is how to apply governance and user protection rules to a new system without interfering with its design in such a way that it will change it into another system alltogether. For bitcoin and other cryptocurrencies to be widely accepted, some measures will need to be in place to identify and remove bad actors.

Think about it, next time your wallet (or your grandma’s crypto wallet) gets hacked and a small fortune in tokens gets removed from your vault, wouldn’t you like to be able to go to the “police” and have the police track the bad guys, arrest them and get your money back? I surely and I am pretty sure my grandma does too!

Unfortunately today no such mechanism is in place… for me, today is still a bit like the wild west, to recover your gold, you kinda have to go out and hire some skilled gunslingers (aka hacker/mercenaries) to trace the bad guys and bring you back your vault with your gold in it 🙂  

This question was originally posted in Quora, here is the link https://qr.ae/TUtF4LIf you liked my answer, go to Quora and “Upvote” it. Please share the post too, would love to hear some different points of view and comments.


What cryptocurrencies do that Visa, Mastercard & American Express cannot do for your online business?

Since you can’t pay with cash online, I would venture to say that most online buyers use a credit card to pay for their purchases. If you are the online seller, you pay up to 6% or more to accept credit cards and you take a risk due to the rampant fraud on card not present transactions. Lets us assume you are an online business where budgets are tight and cannot put in place the sophisticated fraud-detection software required in your checkout process to limit or stop fraud. If this sounds like your shop then keep reading, this is for you.

The customer is always right.

If a credit card number gets cloned or stolen and you as a shopper gets charged for a shopping spree you call your bank/credit card company and reject all the charges — because it was not you making them. For the most part, the credit card companies will side with the customer and either put a hold on the transaction and even reverse the charges for the cardholder while the issue gets resolved with the vendor.

Customer protection equals loyalty.

Usually, the bank and credit card company do a very good job of fulfilling their promise to the cardholders, they will reverse all the charges and eventually get all your money back. This makes a lot of sense if you are the credit card holder, after all, you are paying for the card and all the benefits it brings with it – the credit card companies and the banks want you to keep your card and happily pay the fees every year/month. It is in their best interest to have a loyal customer.

woman holding card while operating silver laptop

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But did you ever wonder what about the hundreds of merchants who sold, shipped or served to someone using a stolen card number? Well, the short answer is they are the ones carrying the burden.

The credit card processor policy: reverse the charge first ask questions later.

If you are a merchant that accepts credit cards, most often you need a credit card processor. In short, they take the cash from your customer and deposit it into your bank account minus a few fees. That works well most of the time, until a cloned credit card transaction comes across, in which case the credit card processor will take the cash out of your bank account and “process a reversal of the transaction” — and yes they are allowed to do that for up to a year after the transaction was executed… read the fine print in your merchant processing contract. Not cool if you are the seller right?

What are the alternatives?

An alternative you might want to consider is accepting cryptocurrencies such as bitcoin or ethereum just to name a few. Payments in cryptocurrencies like bitcoin (BTC) or ethereum (ETH) are better suited for online shipping because they are irreversible. Once the transaction has been confirmed by the network, you got your payment and there are no reversals. The blockchain is immutable, no one can go back into the blockchain take your money.

The bad news is that crypto wallets (where you keep the keys to your bitcoins or ethereum) are not as prevalent or as widely accepted as credit cards are today. Just ask around how many people in a room have a credit card on their wallet vs how many have a crypto wallet (even though the vast majority are free and pretty easy to use as an app on your phone).

Who will drive the adoption of cryptocurrency?

Consumer have a solution in their pockets already, they have cash and credit cards. They are not the ones feeling the pain and neither are their banks or Visa, MasterCard or American Express, those guys are making millions of dollars on transaction fees. It is the online shops who have the problem, and it is them who need to start changing the habits of their consumers to prevent the millions of dollars lost to credit card fraud.

Cryptocurrencies are not hard, you already know how to use them.

If you know how to use Venmo, PayPal, Square, Snapchat, Facebook, WhatsApp, Tinder, Instagram or Twitter, you already know how to use a crypto wallet in your phone. It is as easy as to download a reputable wallet like MyCellium, Blockchain, Xapo, Ethereum or Jaxx. If you are a retailer, you might want to try Coinbase or a cryptocurrency enabled shopping cart.

The most important step is to get educated on this new technology, because it will save you lot of money in the long run, and that is something Visa, MasterCard or Visa cannot do today.

If you want to learn more about how using cryptocurrencies or using blockchain technology can save you money, contact me via LinkedIn https://www.linkedin.com/in/powermeza/

BitCoin (BTC) an alternative to cash – Trends to watch in 2013

According to Global Trends in their GT Briefing December 2012: Trends to watch in 2013, they mention BitCoin as an alternative to cash under “Who needs Banks anyway?” section of their report.  This along with Mobile-wallets and Crowdfunding, are definitely things to keep close tabs on as I suspect they will gain significant traction to in 2013.


The Global Trends to watch in 2013 are:

  1. Social everything: New generations and their digital world stepping forward
  2. Redefining value: The consumer is winning the fight to own the new consumer
  3. Distributed everything:  Mobility in production and consumption
  4. The next “industrial” revolution: Robots and smart machines reshaping work
  5. The new space race: Pushing the frontiers of technology once again?
  6. Geopolitical wars: The fight to control the future
  7. Resource wars escalating: From a world of abundance to shortage
  8. Business stepping up:  From profit to purpose
  9. Information is power: The security challenge
  10. Who needs banks anyway? Reshaping the financial system

Extracted from Global Trends http://www.globaltrends.com/monthly-briefings/176-gt-briefing-december-2012-10-key-trends-to-watch-in-2013  Related presentation materials can be downloaded in PDF for further reading at http://www.globaltrends.com/images/stories/GT2013/Global%20Trends_Ten%20Key%20Trends%20to%20Watch%20for%202013.pdf

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