As the rapid development of cryptocurrencies continues apace, it has never been more important that policy makers and the general public know how the technology works, and understand the benefits it can offer.
However, as the latest findings of a joint study by Amárach and Red Flag show, a lot of confusion still exists around the technology which is already changing international finance, along with a range of other sectors.
Right now, 120,000 Irish people own a cryptocurrency, and this represents a 300% increase compared to just four years ago. Those figures alone give a sense of the rapid evolution which has been taking place.
More and more Irish people are developing an interest in the sector, and one in ten respondents said that they intend to purchase cryptocurrencies in the future.
Also, the key names in the sector are now widely known. While only a minority of adults were familiar with Bitcoin in 2014, the figure increased to 85% in 2018. More strikingly, it was found that 180,000 Irish people have at some point collected, traded or used Bitcoin.
This is hardly surprising given the prominent media coverage which Bitcoin has received of late. However, that media frenzy did not translate into widespread public understanding of what Bitcoin actually is, or how it works.
In fact, when asked whether they had heard of the blockchain technology underpinning Bitcoin, 74% of adults responded that they had not.
Given the potentially transformative power of blockchain, and how it is likely to revolutionise entire industries soon, this is surprising, and it shows the task which needs to be done to ensure that Ireland is in a position to benefit from the changes charging down the tracks.
Blockchain is a distributed database which uses state-of-the-art cryptography to allow transactions in a way that guarantees security and privacy for those involved.
Whereas in the past, such transactions had to go through other third parties for authentication and other purposes, the advent of blockchains – of which Bitcoin is just one – presents humanity with an opportunity for mass collaboration on an individual basis.
This will allow for potentially endless possibilities for how to revolutionise entire industries and improve all our lives.
Financial transactions should become faster and more efficient, and traditional banks are now racing to adapt to this new reality.
In a world plagued with the threats posed by cyber-attacks, blockchain will allow for much greater data protection for individuals and companies alike.
All kinds of personal records, from the healthcare sector to legal contracts, could simultaneously be made more accessible and more secure, due to a system which makes it impossible for data to be altered without the permission of the user.
Considering the enormous societal implications of blockchain and cryptocurrencies, it is surprising that advocates of such exciting new financial innovations have not been more anxious to educate the public about what it is and its potential.
While the trends in the study by Amárach and Red Flag show that the public is slowly developing a more positive view of cryptocurrency, considerable skepticism still exists.
Around a quarter of Irish people (24%) surveyed think that crypto-currencies are simply a passing fad.
More worryingly, one in eight people think that crypto-currencies are mostly used by criminals, in spite of the fact that blockchain and related technologies have the potential to clamp down enormously on criminal activity and make the internet a safer place for everyone.
Such misconceptions are far from harmless for a new technology on the cusp of gaining widespread popularity.
While effective regulation is always necessary, policy-makers can sometimes aim at emerging industries and enact detrimental regulations based on inaccurate perceptions and imperfect knowledge. Bad decisions because of such mistakes can cost businesses – and potential consumers – dearly.
Already, there are growing calls for new regulations to be placed on cryptocurrencies.
Earlier this year, the Governor of the Bank of England Mark Carney called for this, and in April, the European Parliament backed a move to introduce new regulations on the sector.
These regulations may well be desirable and necessary. But regulations have to be based on evidence about what is really happening, what is actually required, and what works.
Thankfully, Ireland’s Department of Finance has been proactive in assessing the implications of blockchain and virtual technology.
They have also set up an intra-departmental Working Group to monitor technological developments and regulatory developments at EU and global level. This group has also been engaging with industry experts and promoting better understanding of the technology across all levels of government.
This positive approach is to be welcomed. However, with public understanding of cryptocurrencies so low, there is always a risk that a new regulatory threat could emerge on the horizon and threaten to derail the progress which is being made.
That is why an educational drive aimed at the public, policy-makers and regulators is vital to ensure that Ireland can become a world-leader in this area, and to ensure that ordinary people can benefit from the extraordinary possibilities which blockchain and other financial technologies can offer.
Download the full survey here.