Do Cryptocurrencies Pose a Risk to Academics?

The world of higher education is experiencing a tremendous revolution because Cryptocurrencies have become an increasingly popular form of digital currency. Unlike traditional currencies, which are backed by a central authority (like the US Federal Reserve), Cryptocurrencies are “totally digital’, which makes them decentralized. The decentralized structure of Cryptocurrencies is what gives them their value and makes them such a risky proposition for higher education institutions.

Though trading these currencies on exchanges like Bitcoin Prime is highly profitable, there is a feeling that Cryptocurrencies are unsafe for the education of our children. This article will explore why Cryptocurrencies pose a risk to higher education, and what you can do about it.

What is a Cryptocurrency? 

As mentioned earlier, Cryptocurrencies are a digital form of currency. Digital currencies have no physical form, and are instead “totally digital’. The decentralized structure of Cryptocurrencies is what gives them their value and makes them such a risky proposition for higher education institutions. Because these currencies are decentralized, the risk to academia is that the currency could become worthless overnight.

Why Does a Cryptocurrency Pose a Risk to Higher Education? 

Cryptocurrencies pose a risk to academics because the decentralized structure of the currency makes it difficult for banks, businesses, and governments to regulate. This means that regulators are not able to control the supply of these currencies, which is what gives them their value. As one of the fastest-growing forms of digital currency, Cryptocurrencies have become an increasingly popular form of digital currency. 

Theoretical Basis for the Risk to Higher Education.

The theoretical basis for the risk to higher education institutions is not so much the volatility of Cryptocurrencies, but their decentralized nature of them. The effects that Cryptocurrencies have on higher education are mainly being felt in two ways:

1) Cryptocurrencies are making it more difficult for universities to control their alumni databases and thus engage with their alumni.

2) Cryptocurrencies represent a potential threat to the university’s endowment funds.

Practical Considerations for the Risk to Higher Education.

The decentralized nature of Cryptocurrencies is what makes them such a risky proposition for universities. The reason for this is that cryptocurrency is not backed by a central authority, which means that there is no recourse in the event of fraud or other malfeasance on the part of an institution. For example, if Wendy’s operated on a currency like Bitcoin, and one day it claimed that it had 1 million worth of Wendy’s coins in its possession, but then it was later discovered that they only had 500k worth of coins, there would be no way to recover the lost coins. 

One potential solution to this issue would be to create a central authority (called a ‘trustee’) that could help maintain some oversight over transactions involving Cryptocurrencies and provide some level of recourse in the event of fraud. This trustee would also need to have sufficient funds to cover any losses incurred by cryptocurrency holders. If we were going to elect someone as trustee, who do you think it should be? A government? The United Nations? An international bank?

Another practical consideration for higher education institutions when it comes to Cryptocurrencies is the risk associated with accepting these digital currencies as payment for tuition or fees. Unlike traditional currency transactions (totaling $500), which require only the normal verification and authentication steps like address verification and identity verification, transactions totaling $500 made in Cryptocurrencies can require upwards of 10 different verification steps before being approved. These additional steps place an unnecessary burden on both students and administrators.

Conclusion.

It can be argued that cryptocurrency poses a risk to higher education in several ways. Firstly, the underlying technology of blockchain—which is the basis for most Cryptocurrencies—requires users to download and update the software, which requires connectivity that may not exist on college campuses. Secondly, cryptocurrency makes it easier for students to speculate in risky markets, and the volatility of cryptocurrency markets may affect a student’s ability to concentrate on their studies. Lastly, there are some concerns that the volatility of cryptocurrency markets may lead to lower endowments for schools as they may invest in Cryptocurrencies rather than stocks or bonds.

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