Digital Diligence: KYC and The Crypto Community

This year marks the tenth anniversary of the advent of Bitcoin, and of digital currencies in general. While the current price of most digital currencies is not what enthusiasts would hope for, the global markets are trending downward in general, which means that grave concerns may be premature. You can easily stay up to date with the latest price of digital coins like Bitcoin, Ethereum and Litecoin if you’re invested in crypto or if you simply want to observe an interesting story unfolding.  

Because cryptocurrency (we’ll use crypto for brevity’s sake) is such a recent phenomenon, it’s difficult to predict its patterns and the way it will respond to macroeconomic fluctuations. However, with more and more reliable crypto to fiat gateways opening up shop, and more and more institutional retailers jumping on the bandwagon, it is extremely unlikely – pretty well impossible – that crypto will become obsolete any time in the near future. 

In this post, we’re going to explore the possibility of mass adoption and the interests of big banks versus the polarizing cyberpunks and anarchists who want to keep crypto “pure”. Policies like Know Your Customer (KYC) combined with Anti-Money Laundering (AML) measures, may, at this juncture, be the only way to ensure a bright future for the digital currencies we’ve come to know and love. 

Big Banks Vs Anarchists

You can pretty well summarize crypto’s current stumbling blocks by looking at the debate between government/ financial institutions and libertarian cyberpunks. Governments that have acquiesced to crypto markets and digital exchanges within their borders have mostly done so uneasily, calling for more oversight and regulation in what is often called the wild west. On the other side of the debate are freethinkers and anarchists who claim that no cryptocurrency is better than a regulated cryptocurrency. 

This partisan battle brings to mind the biblical tale in which an alleged mother would rather see an infant cut in half than give them away to another family. The reality of the situation is that criminals and terrorists could use crypto networks to their advantage if KYC and AML policies are not implemented. For every one thousand morally upright Bitcoin users, there could be one criminal using crypto to further their schemes – this, of course, is enough to warrant more oversight. 

Finding the Middle Ground 

There are, undoubtedly, conservative critics who would much rather see crypto dead than regulated at all, so identifying the moderates who are willing to compromise should be the priority for captains of the crypto industry. In 2008, crypto was introduced as a radical alternative to the fiat currency system, but like all novel ideas that are valuable to society, at some point concessions need to be made for mass adoption to be plausible. 

This is where KYC and AML come in huge. Basically, these policies allow digital exchanges to keep track of users’ identities in the rare case that there is suspicion of terrorism or federal crimes. While some paranoid skeptics argue that this makes crypto institutions another method of harvesting data and personal information, realistically, exchanging currency through the blockchain is still the most anonymous and secure method of all. Platforms and gateways invested in the future of crypto would be jeopardizing their own future if they were careless with this information.

Auto vs. Manual KYC

Crypto exchanges are divided between auto and manual KYC. Manual KYC can be labor intensive and increase waiting time for customers new to an exchange. It’s a hurdle to popularizing crypto use. Auto, or eKYC, enables exchanges to accelerate customer acquisition. It makes KYC instantaneous and painless. Crypto exchanges like Bitbuy are moving from manual to auto KYC for this very reason.

Rifts in the crypto community play right into the hands of anti-crypto critics. Naysayers should take a closer look at KYC and AML, remembering that a completely unregulated crypto market may be the very end of crypto itself.

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