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Is the Concept of Blockchain Technology and Cryptocurrencies Ethical in a Society?
Ethics describes the moral principles that direct an individual’s behavior or how they perform an activity. It draws the line between what is morally good or bad and what is morally right or wrong. Therefore, it would be best to peruse the different cryptocurrency scenarios to determine whether cryptocurrencies and blockchain technology are ethical to society.
The increase of 38.38% in cryptocurrency hacks from 2019 to 2020 is an excellent example of its unethical nature. In 2020 alone, there were $513 million cryptocurrency hacks and thefts. Although this does not wholly depict the ethics in cryptocurrencies and blockchain technology to society, it clearly shows some ethical traits in a frenzy. The ethical impact of cryptocurrencies and blockchain technology comes down to how people decide to use them.
What Determines ethics of Blockchain Technology and Cryptocurrencies in a Society?
Ethical issues in blockchain technology and cryptocurrencies arise whenever humans are involved in decision-making. That’s why ethical standards of conduct back several professions in society.
Blockchain technology and cryptocurrencies deal with major ethical issues, meeting society’s expectations concerning security, efficiency, privacy, and the system’s integrity. In other words, the need to mitigate or avoid immoral conduct in a society like theft, fraud, scams, etc.
These issues are not new to blockchain technology or cryptocurrencies but have been fatal to their application. As a result, both may face considerable risks if they’re not anticipated and significantly addressed.
Ethical Issues in Blockchain Technology
Similar to other fields like medical research, blockchain technology, and cryptocurrencies face some ethical risks. Generally, this is about over-hyping the technology’s potential and then over-promising what it can deliver. Unfortunately, several tech companies follow that path and tend to announce ‘breakthroughs’ that, most often than not, are opposite to that description. Is it ethical in a society? It’s not. Many get driven by money, ego, and other factors that contribute to them claiming more than can be delivered.
Since the inception of Blockchain technology into the financial ecosystem, it has worked as a technology to solve the ‘problem’ of government interventions over economic activities. Due to the decentralized nature of blockchain technology and cryptocurrencies, they bridge two significant ethical challenges: fraud and scams. These challenges tend to destroy the efficiency of free markets. Mediating institutions have the advantage of providing a measure of supervision that can effectively identify and constrain the misuse of markets. In the long run, this can mitigate blockchain technology and cryptocurrencies for criminal and anti-social activity. However, that goes against the foundation that cryptocurrencies got built on – zero intermediaries.
Recent Unethical Trends
An excellent example of the exemption of mediation in a frenzy is the dark web. Many crypto enthusiasts applaud the degree of freedom that blockchain technology accords. Regardless, some are skeptical in the facilitation of conduct that violates the fundamental norms that base a society. Unfortunately, cryptocurrencies based on blockchain technology are the most used medium of exchange in the rankest regions of the dark web.
For example, Ethereum is decentralized, but its consensus mechanism can create a centralized notion. For this reason, some Ethereum core developers take part in the decisions made on the Ethereum blockchain, which raises some ethical concerns in society.
In particular, after an incident in 2016, an infamous hacker of the DAO took advantage of draining almost a third of $160 million in Ether raised on the Ethereum platform. To counter the problem, several Ethereum core developers proposed a hard fork to restore the funds. Several Ethereum miners implemented this solution and altered Ethereum’s code, which ultimately modified the immutable blockchain. The remedy resulted from a few people advocating successfully for the hard fork, which was ethically good and right.
Another example is a company called Parity that left a bug in its smart contracts, which gave a user the ability to take control of hundreds of wallets containing millions of dollars worth of Ether. When the user tried to remedy his actions, it led to $289 million worth of Ether getting frozen. When the account owners of the frozen Ether tried to justifiably push for a hard fork similar to the DAO hack, it got rejected. So instead, Ethereum core developers chose to leave the $280 million locked. The two examples are evident enough that human intervention in blockchain technology and cryptocurrencies can raise ethical concerns in society.
The use of blockchain technology and cryptocurrencies by individuals in the dark web to partake in illicit and illegal trades has cast a negative shade that has turned out difficult to shake. Nonetheless, this sentiment came from the legend of the 1970’s cypherpunk movement that arose with the objective for people to use a digital cash currency free from any government intervention. Instead, economic power would shift to individuals.
Cryptocurrencies also promote positive ethical motives, like when Vitalik Buterin, co-founder of Ethereum, donated 50 trillion Shiba Inu coins in May 2021. It was worth $1.2 billion at the time donated to India’s Crypto Covid Relief Fund.
Cases of blockchain fraud have also clouded the frenzy, and it proved unethical to society. For example, in July 2020, some selected Twitter accounts for prominent people were compromised to promote a Bitcoin scam. The scam aimed at giving back to society managed to succeed since there was a lack of a paper trail which paved the way for scammers to embezzle funds. Cryptocurrencies and blockchain technology have had their share of negative ethics from society, like the July 2020 scam, where the scam’s value has not been determined to date.
Cryptocurrencies have been around for more than a decade now, and it might be unclear to determine whether they are ethical to society or not ideally. Nevertheless, some cases like the theft of nearly $500 million in digital tokens in Tokyo depict some unethical values involving cryptocurrencies and blockchain technology. On the other hand, other cases where cryptocurrencies get used for donations to charity give a positive ethical impact on society. Thus, whether cryptocurrencies and blockchain technology are ethical to society requires society boils down to how people utilize them to impact society at large.