Page 120 - Cyber Defense Magazine for August 2020

People Demand Digital Money

It may surprise you to learn that the concept of internet money did not start with the first cryptocurrency
in the form of Bitcoin (BTC). In fact, the most ancient and pervasive form of money – gold – was the first
basis for digital currency in 1996. Called e-gold, it was effectively a stablecoin before there was such a
thing. Anyone with an e-gold account was able to transfer money equivalent in value to grams of gold to
other e-gold accounts. Unfortunately, it grew too much in popularity before the government shut it down
in 2008.

E-gold may have ultimately failed as a digital currency, which is what people called it at the time, but it
demonstrated a high demand for money that is not externally tempered with and controlled by
governments. Just one year later, Bitcoin emerged on the scene as a digital currency entirely confined to
the digital realm and outside government control. As Bitcoin gained more traction and value, the legacy
media became fever-pitched in tying Bitcoin to the criminal underground.

Fortunately, all their efforts failed along with their trustworthiness. On the other hand, the most current
data on Bitcoin adoption rate provided by The Tokenist, tells a story of increased trust in Bitcoin over
traditional institutions, by 29%. The upward shift in Bitcoin trust and familiarity is primarily led by male
millennials, while people older than 65 are least likely to own and use Bitcoin.

The latter part is important to note because older people represent a demographic that views money as
something that is strictly:

1. Physical
2. Government-controlled

Regardless of age, we can safely say that these two money attributes are more or less present in the
minds of all demographic groups. Therefore, they represent substantial psychological barriers to
overcome for further cryptocurrency adoption. Thankfully, the government’s reaction to the coronavirus
greatly eroded the embedded notion that money, as physical and government-controlled, is inherently
superior to digital money.

When the Federal Reserve decided to summon trillions of dollars on multiple occasions to save the
market from totally crashing, no one with a straight face could say ever again that government money is
derived from real wealth. On the other hand, Bitcoin draws from a predetermined, finite pool of coins, with
each Bitcoin ever-growing in value.

However, there is another aspect to digital money that makes people instinctively distrust it –
cybersecurity. In particular, the prevailing sentiment that anything digital is hackable.

Cyber Defense eMagazine – August 2020 Edition 120
Copyright © 2020, Cyber Defense Magazine. All rights reserved worldwide.