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Tuesday, May 21, 2024

Cryptocurrencies just became a lot less secure as recovery of bitcoin colonial pipeline ransom sets path towards fiat-currency-style control, says GlobalData

Following the news that the US Government has managed to retrieve most of the Bitcoin that was used to pay off the Colonial Pipeline hackers;

Danyaal Rashid, Thematic Analyst at GlobalData, a leading data and analytics company, offers his view:

“It is no surprise that the price of bitcoin fell by around 10% after the news of this ransom recovery. Slowly we are beginning to see disruption of the key selling points of cryptocurrencies as a sort of reality check, as their security is compromised. Bitcoin was supposed to liberate us from government control: decentralized and out of the government’s hands. The fact that the US Government has managed to recover most of this ransom, despite it being paid in Bitcoin, goes directly against this. It is impossible to argue that the cryptocurrency is completely decentralized and free from government control when a state entity can seize it – even when the accounts are held outside of their country.

“Previously, one of the criticisms of cryptocurrencies by government has been their adoption by criminals. The irony is that this story goes to show that the very openness and traceability of cryptocurrencies may actually make it more difficult for criminals to operate.

“Despite this, this seizure may have opened a can of worms that changes the way that people fundamentally view cryptocurrencies from now on. No longer are they untouchable assets. In fact, to the contrary, they are some of the easiest assets to trace, meaning that government can step in and recover funds. However, this also means that there is the potential for governments to dictate what cryptocurrencies can be used for and so disrupt any payments that go against this, effectively leading them to be controlled in much the same way as fiat currency.”

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