Cryptocurrency boomed in 2021.<\/p>\n
According to the cryptocurrency exchange platform Coinbase, the market grew by more than 250% annually as of Dec. 15. Long known for the leading currency Bitcoin, the market has diversified into more than 11,500 coins with various functions and uses.<\/p>\n
While many investors see great potential in cryptocurrency, questions still surround the market, from its complexity to its volatility and lack of regulation. And while it has yet to take off as a mainstream form of currency, both in Arkansas and beyond, some authorities and investors see great potential for it moving forward.<\/p>\n
\u2018THE DIGITAL CURRENCY OF THE INTERNET\u2019<\/strong> \u201cCryptoassets were designed to be an online way to get around all the expenses of banks; completely peer to peer, no middleman, no banks, no government, no oversight, no fees, no delays,\u201d said Carol Goforth, a law professor at the University of Arkansas who has become a leading scholar on the regulation of crypto assets. \u201cIt was designed originally to be a substitute for currency, where the government knows everything you\u2019re doing.\u201d<\/p>\n \u201cIt\u2019s the digital currency of the internet,\u201d said Chad Yoes of Bentonville, general partner at Centurion Crypto Fund 1.0, a digital currency fund that simplifies and provides easy access to crypto investing for accredited clients. \u201cIt\u2019s a very complex market, and there are a lot of nuances with it.\u201d<\/p>\n Cryptocurrencies and crypto assets serve a wide variety of uses, from currencies specifically for use in video games to broader utilization of blockchain technology that can monitor and provide transparency in areas such as supply chains. Goforth pointed to Walmart\u2019s collaboration with IBM to work with farmers to track their products using blockchain technology.<\/p>\n \u201cSo if there is something that is contaminated, they can trace it quickly and safely and avoid throwing away food that is good while they quickly throw away anything that is tainted,\u201d she said. \u201cIt took a couple of weeks to do it under conventional tracing methods and a handful of seconds to do it once we had everything on the blockchain.<\/p>\n \u201cThe uses are really only limited by human imagination and ingenuity,\u201d she added. \u201cAnd we\u2019ve really only scratched the surface of what can be done.\u201d<\/p>\n Crypto\u2019s utility has attracted more than 100 million investors worldwide, but the lack of regulation carries risk. The Arkansas Securities Department\u00a0 (ASD) views cryptocurrency as \u201ca speculative investment for retail investors looking to purchase digital currency or derivative products to make a profit\u201d and urges investors to exercise caution.<\/p>\n \u201cThe recent wild price fluctuations in cryptocurrency-related investments can easily tempt unsuspecting investors to rush into an investment they may not fully understand,\u201d ASD Commissioner Eric P. Munson said. \u201cCryptocurrencies and investments tied to them are high-risk products with an unproven track record and high price volatility. Combined with a high risk of fraud, investing in cryptocurrencies is not for the faint of heart.\u201d<\/p>\n \u2018NASCENT STAGES\u2019<\/strong> Currently, the Arkansas Securities Department does not plan to accept cryptocurrency as a mode of payment due to that volatility. But Yoes said there are stable cryptos from which to choose.<\/p>\n \u201cIf that was your fear, both on the merchant and consumer side, there are coins you could be in that are much more stable and less volatile,\u201d Yoes said.<\/p>\n For crypto to proliferate as an actual currency instead of simply a commodity, Yoes said vendors will have to \u201cgrow tired of paying merchant fees to a credit card company.<\/p>\n \u201cThey\u2019re going to realize, \u2018Wait a minute, I can save 3.5% by using this token,\u2019\u201d he said.<\/p>\n NON-FUNGIBLE TOKENS<\/strong> According to Yoes, the technology has a practical use, specifically in areas such as ticketing.<\/p>\n \u201cThe NFT market\u2019s most practical use is to verify ownership and authorship,\u201d Yoes said. \u201cSo if you had something where you wanted to prevent some sort of counterfeit asset \u2014 think tickets to a sporting event or concert \u2014 the venue can scan it and instantaneously determine if that\u2019s a legitimate ticket or not.\u201d<\/p>\n According to Kevin Trainor, senior associate athletics director for public relations at the University of Arkansas, the athletics department is exploring NFTs but has no immediate plans to adopt the technology.<\/p>\n \u201cWe are reviewing its position and outlook in the industry, its various applications, and its stance at the conference level,\u201d Trainor said. \u201cHowever, I wouldn\u2019t say something is imminent about that at this point. We are just looking into the space, as we do other emerging trends within the industry.\u201d<\/p>\n REGULATORY RIGAMAROLE<\/strong> But Goforth sees the regulations as vague and potentially stifling.<\/p>\n \u201cWe need clarification of regulatory structures and environments and making sure they\u2019re balanced,\u201d she said. \u201cI understand the risk of fraud and criminal elements, but I\u2019m not sure the regulators do more than give lip service to the reality that this is also a very exciting and potentially positive technological development that we need to avoid stifling. And I think the regulatory system we have right now is darn close to stifling innovation, and I hope that changes.\u201d<\/p>\n As for the future, Goforth sees additional regulations being passed by Congress on stablecoins, which are cryptocurrencies tied to a more stable reserve asset such as the U.S. dollar or gold. She then sees government-backed digital currencies that will provide additional legitimacy to the market and draw in new users and investors.<\/p>\n Yoes, too, predicts the crypto asset market will continue to grow but sees the need for more simplicity and trust.<\/p>\n \u201cCryptocurrency will have to become simpler to explain and be accepted in faith,\u201d Yoes said. \u201cPeople have to have faith in the cryptocurrency and adopt it for widespread use. That comes from more users. At the end of the day, when it gets to a billion users, everybody will know it\u2019s here to stay.\u201d<\/p>\n<\/p><\/div>\n
Cryptocurrencies \u2014 which belong to a broader group of assets utilizing blockchain technology known as crypto assets \u2014 are digital tokens exchanged via blockchain. This distributed database acts as a complex virtual ledger that can quickly and efficiently verify ownership of an asset while also ensuring secure and decentralized transactions.<\/p>\n
Yoes said cryptocurrency is still in its \u201cnascent stages\u201d of use in Arkansas and has yet to be used as a widespread form of payment. The lack of service is partly due to crypto owners holding their tokens instead of selling or trading them and cryptocurrency\u2019s general price volatility, creating instability in using it as a payment for services.<\/p>\n
While blockchain technology is currently used in different ways across the state, crypto assets themselves have yet to see any widespread use in Arkansas. One area that may see adoption soon is non-fungible tokens (NFT), which uses the blockchain to represent ownership of real-world items such as music, art and other media.<\/p>\n
According to Goforth, crypto assets face challenges that could threaten their proliferation in the coming years. The crypto market provides a new opportunity for money laundering and other financial crimes that have drawn the federal government\u2019s attention. The new infrastructure bill expands tax reporting requirements for cryptocurrency transactions, requiring brokers to issue 1099-B forms to investors. And federal administrators, such as Federal Reserve Chairman Jerome Powell and SEC Chairman Gary Gensler, have expressed concerns regarding cryptocurrencies and have hinted at additional regulations.<\/p>\n![\"\"](\"https:\/\/talkbusiness.net\/wp-content\/uploads\/2022\/01\/CVR_Crypto_Goforth_1-3-22.jpg\")
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