The Federal Reserve and FDIC (Federal Deposit Insurance Corporation) released a joint statement on Tuesday, Jan 3. The paper describes the risks of holding digital assets. But here are some of the ways crypto is addressing those risks with network design and code.
The Fed and FDIC say that with crypto, there is a “risk of fraud and scams among crypto-asset sector participants.” But there are also several countermeasures and security techniques in crypto. Furthermore, cryptocurrency actually uses these to reduce the risk of fraud or scams.
No one is claiming that cryptocurrency is completely incorruptible. Neither is it said that crypto is immune to fraud, scams, or cyber-criminal exploits of the code. There’s no perfect software solution, just as there is no perfect business solution.
Everything in an economy is a tradeoff among comparative advantages. Moreover, those tradeoffs are part of a market game to produce the most and meet the most wants.
But cryptocurrency does offer some features and benefits that gain more security. That’s not just to hold your crypto but also against fraud or scams. These fraud and scam benefits, however, come as a trade-off. You get less control over your account through a centrally regulated, corporate customer help desk.
“Risk of fraud and scams among crypto-asset sector participants…”
DeFi protocols are increasingly developing countermeasures to fraud and scams. DeFi is short for “decentralized finance.”…
