By ADAM BEBB
The University Daily Kansan
Unless you’ve been living under a rock for the past couple of years, you’ve probably heard of the emerging cryptocurrency industry that’s erupting across the world. This push to virtually eliminate paper currency has received serious backing from big-time investors, but, as the idea of owning some form of untraceable, electronic capital becomes more mainstream, regular middle-class people have decided they want their share.
Unlike how every fiat currency system works across the world, cryptocurrency has no central bank to regulate itself. Instead, it functions on a system of mining, which is basically a network of mathematical puzzles in which investors can “dig” for more bitcoin, furthering their investments. Although a laissez-faire monetary system may seem attractive and even logical to some, we need the regulation that a system like the Federal Reserve provides to protect our finances.
Investors in a Japanese cryptocurrency exchange known as Coincheck learned this lesson quickly after $530 million of users’ investments suddenly disappeared last week. According to CNN, hackers stole from 260,000 investors, who are to be “partially reimbursed,” as they plan to pull $426 million from their own funds to only cover 80 percent of what was taken. The exchange is currently under government supervision until it can figure out how to improve its strategy to make sure this never happens again
This heist surpasses the ravaging of the Mt. Gox exchange for $400 million in 2014, which until last week had been the largest cryptocurrency theft to date. It resulted in the exchange going bankrupt and leaving the affected users uncompensated, which should serve as a good indicator of Coincheck’s future.
The failure of these exchanges are tangible examples of why some form of government oversight needs to happen if we ever want the universal adoption of cryptocurrency to become a reality. Although these heists aren’t the apocalypse of virtual cash, they serve as examples of what can happen when you have no regulation on crazy amounts of money sitting in an exchange.
The hackers and thieves who have shown that they can penetrate these exchanges know more about this industry than the people who hold shares, which should be concerning whether or not you’ve invested. Cryptocurrency is an evolving technology with huge potential, but the responsibility of regulating and protecting others’ finances needs to be dealt with by the government, not tech entrepreneurs.