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The White House Report on Digital Assets: A Critique

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According to reports, a new report from the White House has criticized digital assets for failing to fulfill their initial commitments and posing risks to consumers and the entire

The White House Report on Digital Assets: A Critique

According to reports, a new report from the White House has criticized digital assets for failing to fulfill their initial commitments and posing risks to consumers and the entire US financial system. The report points out that digital assets have been touted as distribution tools for intellectual property and financial value, better payment mechanisms, ways to increase financial inclusion, and ways to cut off financial intermediaries, “So far, crypto assets have not brought any benefits. So far, crypto assets do not appear to provide any fundamental value for investment, nor can they serve as an effective substitute for fiat money, improve financial inclusion, or improve payment efficiency. Instead, their innovation is primarily to create artificial scarcity to support the price of crypto assets – many of which have no fundamental value, which has triggered regulatory efforts to protect consumers “Investors and other financial systems are protected from the effects of panic, collapse, and fraud associated with crypto assets.”

The White House attacks digital assets in a new report, arguing that cryptocurrency is not worth much

Introduction

The White House report has criticized digital assets for failing to meet their initial commitments and posing risks to the US financial system and consumers. The report points out that crypto-asset has been presented as distribution tools for intellectual property and financial value, better payment mechanisms, ways to increase financial inclusion, and ways to cut off financial intermediaries. However, digital assets have yet to bring any benefits.

The Flawed Crypto-Assets Narrative

Digital assets were promoted as an alternative to the existing financial system, with the potential to democratize finance and revolutionize the way we transact. However, these claims of benefits remain unfulfilled. Digital assets cannot serve as a viable investment option or an effective substitute for fiat money. There is no fundamental value to most of these currencies. Their innovation lies solely in creating artificial scarcity to support their prices, and this has led to regulatory efforts to protect consumers.

The Cryptocurrency Scam

Fraud associated with digital assets is rampant. There is an exponential rise in cryptocurrency scams involving illegal fundraising, fake exchanges, and Ponzi schemes. These schemes trick consumers into buying digital assets that have no intrinsic value, and the scammer disappears with the money. Blockchain’s encrypted and decentralized nature makes it hard for regulators to act in time due to a lack of legislative framework.

Lack of Protection for Investors

Investors are at risk as most cryptocurrencies do not have legal protections. Regulators have not authorized many cryptocurrency schemes, and hence users are not protected when the scheme collapses. Besides, cryptocurrencies are prone to high volatility, particularly involving the market price, generating suspicion and confusion among consumers.

Crypto Assets and Financial Inclusion

Digital assets were touted as the perfect tool to increase financial inclusion by offering an alternative banking system for the unbanked. However, crypto assets’ distribution is entirely reliant on the internet, rendering it inaccessible to those without access to the internet or electronic devices. The cost of mining and exchanging cryptocurrencies is prohibitive for most of the poor population to access, rendering digital assets unattractive for many.

Necessity of Banking in Crypto-assets

Crypto-assets require some form of banking that can sell digital assets from legal sources or provide a secure storage space for digital assets. However, electronic wallets, which are crucial for storing digital assets, are subject to hacking, with several cases of stolen user funds being reported. This lack of responsibility institutions makes it difficult for a widespread adoption of digital assets.

Conclusion

In conclusion, the White House report correctly criticizes digital assets’ failure to keep its initial promises and its potential to pose risks to the US financial system and consumers. While digital assets may have revolutionary potential, most of these promises remain unfulfilled. Regulatory efforts are necessary to protect consumers and other financial systems from the consequences of panic, collapse, and fraud associated with digital assets.

FAQs

Q1. What is the problem with digital assets?
A1. Digital assets have failed to deliver on their promises of revolutionizing finance, democratizing financial services, and providing a substitute for fiat money.
Q2. What are the risks associated with crypto-asset?
A2. Fraud associated with digital assets is widespread, with an exponential rise in cryptocurrency scams involving illegal fundraising, fake exchanges, and Ponzi schemes.
Q3. How can investors be protected in the digital age?
A3. Regulatory efforts are necessary to protect investors when the scheme collapses, and there are no legal protections for most cryptocurrencies.

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