In the dark corners of the internet, faceless and nameless individuals whose identities are unknown by the government stare intently at their computer screens as they write thousands of lines of code. These anonymous individuals are like the cowboys of old, galloping across a deserted and mostly unregulated land — except, this isn’t land, it’s the internet, and these cowboys aren’t robbing banks, they’re creating money and selling it. This money is known as cryptocurrency.
You might have heard about cryptocurrency before, from Bitcoin’s near $1 trillion market valuation, or as the favored means of payment on the notorious drug and arms website, “Silk Road.” At its most basic level, cryptocurrency is a string of computer code that is stored in “blocks” on a decentralized and distributed ledger, the blockchain. There are many blockchains, each with its own set of rules that must be followed by computer code in order to be accepted. In essence, the blockchain may be compared to a classic paper-bound ledger that is shared among many individuals. Every transaction is recorded in that ledger, and each transaction preserves a record of the transaction that came before it. When a new transaction is validated by a majority of the ledger’s holders, it is instantly added to everyone’s ledger. Now, in reality, this ledger is not kept by “many” individuals; at the time of writing, it is believed that over one million people hold this ledger in just Bitcoin alone.
Giving just about anybody the ability to create a cryptocurrency can create a situation where bad actors can engage in fraudulent behavior. A “rug pull” is one of the most profitable and complex forms of fraud that takes place. Here’s how it works: To begin, an unscrupulous programmer will write code that follows the rules of a certain blockchain network. Because they control the supply, they then surreptitiously move a significant portion of the supply to their own cryptocurrency “wallets.”
Continue reading: https://thehill.com/opinion/finance/594766-the-us-must-embrace-cryptocurrency-to-remain-an-economic-powerhouse
You might have heard about cryptocurrency before, from Bitcoin’s near $1 trillion market valuation, or as the favored means of payment on the notorious drug and arms website, “Silk Road.” At its most basic level, cryptocurrency is a string of computer code that is stored in “blocks” on a decentralized and distributed ledger, the blockchain. There are many blockchains, each with its own set of rules that must be followed by computer code in order to be accepted. In essence, the blockchain may be compared to a classic paper-bound ledger that is shared among many individuals. Every transaction is recorded in that ledger, and each transaction preserves a record of the transaction that came before it. When a new transaction is validated by a majority of the ledger’s holders, it is instantly added to everyone’s ledger. Now, in reality, this ledger is not kept by “many” individuals; at the time of writing, it is believed that over one million people hold this ledger in just Bitcoin alone.
Giving just about anybody the ability to create a cryptocurrency can create a situation where bad actors can engage in fraudulent behavior. A “rug pull” is one of the most profitable and complex forms of fraud that takes place. Here’s how it works: To begin, an unscrupulous programmer will write code that follows the rules of a certain blockchain network. Because they control the supply, they then surreptitiously move a significant portion of the supply to their own cryptocurrency “wallets.”
Continue reading: https://thehill.com/opinion/finance/594766-the-us-must-embrace-cryptocurrency-to-remain-an-economic-powerhouse
