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US Congressional Hearing Highlights Blockchain Blind Spots
US congressional hearings on technology are renowned for producing memorable moments.
Some of these moments are comical, like when Rep. Steve King suggested Google (NASDAQ:GOOGL) CEO Sundar Pichai was responsible for his niece seeing inappropriate content on an iPhone (2018) or when several lawmakers questioned ByteDance CEO Shou Zi Chu on China-related issues despite both him and his company being Singaporeans (2023).
However, aside from the generation gap that these moments highlight, they highlight something important: There is still a great need for quality education on technology-related topics. In this case several problems emerged that showed how blockchain technology it is not yet fully understood on a deeper level.
The lie of anonymity is hitting blockchain again
One such example is the persistent misconception that blockchain transactions are anonymous. This isn’t true (transactions are private but can be tracked), but it raised its head several times during the June 5 congressional hearing.
Numerous senators and representatives have raised questions about the ability to implement adequate safeguards when issuing securities on blockchain and whether it is possible to be legally compliant when using public blockchains for financial transactions. For example, Rep. Sean Casten (D-IL) said. public blockchains should be avoided for traditional tokenized securities because anonymity would lead to issues with Know Your Customer (KYC) and anti-money laundering (AML) compliance.
Casten gave an example of how anyone can send tokens to BlackRock (NASDAQ: BLACK) BUIDL Wallet, demonstrating that there is still a great need for clarification on privacy, anonymity and pseudonymity. This also means that some people in power still struggle to distinguish between blockchain, which in some cases have anonymous validators, and applications such as wallets AND smart contractswhere it is possible to integrate KYC/AML regulations.
Furthermore, it highlights the importance of usage proof-of-work (PoW) blockchain.. In these systems, validators, i.e. miners, cannot be anonymous. While there has been much discussion about justifying the gigantic use of electricity, the benefits of it have become clear in debates like these. It is precisely the massive use of electricity that makes it impossible for miners with proof of work to remain anonymous. In other words, it’s a feature, not a bug.
Blockchain education is critically important
Although this congressional hearing has shown that there are still some misunderstandings about specific points of blockchain, one thing everyone agrees on is this tokenization it would bring many benefits. Greater efficiency in the issuance, management and settlement of tokenized securities and the potential benefits of fractionation were widely agreed upon.
Thankfully, people in power have grasped the potential of tokenization, but for it to reach its full potential, tokens will need to run on a scalable public blockchain. Therefore, education about blockchain technology and how it works, for example about the difference between anonymous and private transactions or between blockchains themselves and their various applications, is crucial.
CoinGeek exists to fulfill exactly this purpose. Sign up to educate yourself on blockchain, tokenization, and more. There’s still a long way to go, but we’re slowly getting there!
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