User Privacy in Danger as Crypto Moves into Mainstream Finance
Cryptocurrencies are becoming more and more mainstream every day. Digital assets are actively reported on by popular media, traded by investment firms, and talked about among retail investors. Further, cryptos are now used to purchase goods and services, which is a revolutionary advancement for the greater payment technology industry. Just yesterday, Visa announced that crypto-linked card usage for just the first half of 2021 was over $1 billion.
While extensive crypto usage as means of payment is expanding the digital asset space, there are many concerns over the loss of anonymity. By running crypto purchases through large centralized corporations, the entire aspect of privacy is taken away. There are varying opinions on how important privacy of purchases is, but decentralization has undoubtedly been a major growth factor for digital assets.
People are Taking Advantage of Visa Crypto Purchases
For years, cryptocurrencies could mostly just be used to purchase a handful of products over the internet. This was a major limiting factor for the acceptance of the new asset class, as crypto-haters would claim the coins had no usability, and thus, no value. Now, Visa has partnered with 50 crypto companies to allow clients to spend their coins at any of their 70 million merchants around the world.
Additionally, companies around the world are now accepting crypto directly. Some of the big names include Microsoft, Overstock, and AT&T. There are also thousands of businesses that allow customers to instantly convert cryptos to fiat when paying — now, it is actually possible to buy a Lambo with your crypto.
With credit cards and digital payment systems, technology has already taken over. The newest mark of evolution is the widespread use of cryptocurrencies, touting benefits such as low fees, autonomy, and the unlikelihood for fraud or forgery.
With the crypto industry projected to continue growing at over 11% per year and the huge demand for blockchain-related jobs, digital assets are likely to continue being integrated into everyday society.
The Loss of Privacy with Crypto Purchases
While mainstream usage is a major step for the societal integration of crypto, the current solution takes away the anonymity digital assets were invented to provide. When crypto is converted to fiat for a purchase, it is linked to the spender, thus eliminating purchasing privacy.
El Salvador has displaced the middleman by making BTC a legal tender, allowing individuals to seamlessly pay and accept with BTC. Further, an Argentine politician just introduced a bill that will allow companies to pay employees in crypto.
Cryptocurrencies are so powerful that financial institutions need to either innovate with the asset class, or risk being completely left behind by competitors. The trouble is that the early Bitcoin adopters meant the network to be a replacement for the failing banking system.
As large financial institutions such as Visa become increasingly involved in cryptocurrencies, the markets will be more open to non-technical investors, but also more observable by regulatory agencies. Whether that will be positive or negative for defi is still to be seen.
Opportunities to spend crypto are growing quickly. Have you ever spent your coins in mainstream retail shopping? Is the privacy of your purchases an important factor in crypto spending? Let us know in the comments.