For better or worse, what once seemed magical—the internet and its offspring—has become ubiquitous. Now another digital innovation is beginning to feel a lot like social media did a decade ago. Cryptocurrency’s advocates say it will change the global economy and make money more private and more fair. What could possibly go wrong?
A decade after crypto’s invention, many people can’t decide if it’s real money. (It is.) But the world of digital money is the Wild West and the Gold Rush all at once. Anyone can invent a currency and strike it big if they hire a few programmers.
Crypto promises to fund new global economies—or unleash fresh means of extortion, money laundering and financial scams. There is an enticing view that crypto could pull the developing world into 21st-century commerce, enabling millions to emerge from poverty. It could mean access to cash and loans in parts of Africa, for instance, where banks don’t operate but cell phones—the only tool necessary to trade crypto—are common. “Africa has informal economies—lots of things are done peer to peer,” says Akin Sawyerr, who performs a governance role for a digital currency called Decred. He imagines people in remote villages establishing and expanding businesses.
Cryptocurrencies also appeal to those looking to skirt existing monetary-control systems. “What if governments are no longer the ultimate arbiters?” asks Meltem Demirors, an executive at CoinShares, which oversees more than $500 million in digital assets. While I prefer my currencies closely monitored and controlled, it’s easy to see the potential in crypto secrecy. Transferring funds across borders is fraught with bureaucracy and fees. Countries with weak currencies could gain muscle. The Bahamas, for instance, is testing its own digital currency, called Sand Dollar, which it hopes will help those who live in remote areas by providing reliable access to banking as well as help fight crime…