The world is changing fast–so fast, in fact, that various aspects of global society are not able to keep up with one another. As technology continues to develop with lightning speed, legal systems created in a pre-internet and pre-computing world struggle to keep up with the pace of development in a number of different fields.
Therefore, many new industries–including the cryptocurrency industry–operate largely without concrete regulations. As the tech hurtles forward, members parliaments and congresses around the world are still just beginning to learn what cryptocurrency is and how blockchain works. 10 years after Bitcoin was created, most of the world’s governments have made little to no progress in regulating the way it’s used.
Discover Barcelona Trading Conference – A Top Tier Crypto Trading Event
As a result, cryptocurrency companies have had to forge their own paths. Unfortunately, some companies have taken advantage of the unregulated markets for all they’re worth, creating malicious platforms and products that have ruined lives. But for those that have chosen to take the “high road”, standards of technical safety and ethical behavior have had to be decided independently–with mixed results.
Indeed, the issue of ethical standards for cryptocurrency companies came up recently when cryptocurrency wallet and exchange company Coinbase purchased blockchain analytics firm Neutrino. Some of the executive members of the firm had previously served as executives for Hacking Team, a software firm that collaborated with oppressive governmental regimes to create tools that were used to harm activists and track citizens’ behaviors.
The incident resulted in the creation of the #DeleteCoinbase movement, a hashtag that encouraged users to cancel their Coinbase accounts and delete the app from their devices. Coinbase responded by firing the executives who had worked at Hacking Team.
Coinbase’ Neutrino acquisition wasn’t just a PR nightmare for the company–it also stirred up some important questions for ethics in the cryptocurrency industry.
What kind of behavior should the cryptocurrency community expect from the products and services it uses? What responsibilities do cryptocurrency companies hold to the communities they serve and the communities they establish themselves in? And what are the social responsibilities of cryptocurrency companies?
What is Social Responsibility?
Indeed, as such a new industry, the cryptocurrency sector is facing some unique ethical challenges. While some of these challenges are parallel to those faced by some other parts of the tech world, the crypto community is in the process of establishing its own ethical code.
But in order to know what crypto companies should be aiming for, we must first understand what their ethical requirements should be.
Social compliance auditor and owner of Social Compliance Solutions Vita Alyason told Finance Magnates that “social responsibility is an ethical theory, In which we as individuals are accountable for our own actions. As such, we should make sure that our actions and decisions will benefit both society and the environment.”
For corporations and businesses, this means that they “are expected to make the welfare of society a priority when they make decisions, rather than focus exclusively on profits.” In other words, “in their daily operations, businesses should be concerned about the welfare of society and mindful of how its actions could affect society as a whole.”
And these companies shouldn’t just act in a socially responsible way to contribute to the “greater good”–consumers are starting to expect that corporations find ways to contribute to society. Alyason explained that “nowadays, we can see that consumers around the world, holding corporations accountable for effecting social change with their business beliefs, practices and profits.”
“In some cases, consumers even turn their back on their favorite companies if they believe they’re not taking a stand for social and environmental issues,” Alyason added.
In a practical sense, this means that companies will have “fair labor practices within their own companies and within the supply chain around the world (mainly if production activities, conducted in developing countries)”; that they will “[incorporate] ethical standards (mainly going above and beyond the legal requirements)’ and “[implement] environmentally sustainable practices.”
Applying Centralized Standards to a Decentralized Technology
Cryptocurrency is unique in that for many years, it was largely studied and used by an online community that had a strong sort of ethical code of its own. Although many individuals with many different backgrounds and ideas about how the world should work were members of this community, most of them were attracted to Bitcoin and other cryptocurrencies because of its decentralized nature.
Bitcoin’s decentralization offered several attractive features. It was a currency that wasn’t attached to any government, meaning that its value was based on the fact that people used it rather than having an external value assigned to it. It was also the most anonymous form of digital money available, meaning that it could be used and stored without being tracked by the tax man (or any other agency, for that matter).
“So what qualifies as “unethical” in the #marketing world? #Ethics are obviously open to debate; they’re a matter of philosophy, rather than science, so there’s no coherent intrinsic ethical stance that is proven to be the right one.”#crypto
— Crypto Coffee ☕ [Espresso Maximalist] (@Kristen_Colwell) February 9, 2019
And indeed, user data has been another pain point for the cryptocurrency industry. While most cryptocurrency exchanges have focused their security efforts on securing users’ funds, personal data has (in some cases) fallen to the wayside.
Take, for example, the incident in which Bittrex accidentally leaked users’ passport images in late 2017. Another round of reports circulated in January of this year when a deep-web vendor began selling KYC documents from users of a number of large exchanges, including Bittrex, Poloniex, Bitfinex, and Binance.
In an age when data is the most valuable asset that we have, it’s clear that exchanges need to do a better job of keeping their users’ information safe from harm.
Indeed, the cryptocurrency industry must improve its ethical standards in a number of areas. Luckily, there are many ways to do this–“there are a variety of actions that corporations may implement in order to achieve a culture of social responsibility,” Alyason said.
“However, in my own point of view, the first and most important thing will be establishing a state of mind within the business which focuses on the Social Responsibility and not only profits (and this starts with the top management),” she continued.
“When the top management is committed and driven to incorporate ethics and transparency as the basic stones of the company, then the whole company will adhere to create a culture of social responsibility. I believe that transparency by corporations and suppliers is the main tool for promoting, in practice, awareness and public debate on social issues.”
And remember–what’s good for the goose is good for the gander. “There are lots of studies which show that the more the company acts responsibly and ethically, the more profits she gains.”
