Cryptocurrencies are not accountable to a central authority. The lack of regulation and a responsible central authority is arguably one of the most important ethical concerns for governments and academics about cryptocurrencies. The zero-state problem occurs when the accuracy of the data contained in the first block, or “genesis block”, of a blockchain is questioned. This happens if due diligence is not done with the data or if those who enter it make a mistake or alter the information for malicious reasons.
In the case of a blockchain used to track products in a supply chain, for example, the first block may erroneously indicate that a particular truck is full of copper from a given mine when, in fact, the material comes from another. It's possible that someone involved with the contents of the truck was tricked or bribed along the way, without the person who created the genesis block knowing it. Developers should carefully verify all the data that will be included in the genesis block and use best practices to ensure that it is entered accurately. They must also alert users to the problem of state zero and reveal the ways in which a blockchain can contain false information so that users can assess their potential risks and carry out their own due diligence.
Users should also understand that, even if the data in the Genesis Block and those that follow are accurate and legitimate, mischief can still occur. For example, ethically sourced diamonds can be stuck in a truck and their journey through multiple transfers can be accurately recorded on the blockchain, but that doesn't stop smart thieves from exchanging real diamonds for fake ones during transit. Users must also inform the people they serve about the problem of state zero, disclose the due diligence they carried out in the genesis block, and identify the protections that exist (if any) to prevent fraud. Blockchain technology is described by a series of terms “decentralized”, “without permissions” and “self-governing” that can cause users to make assumptions about governance.
They could assume that it is a wonderland for libertarians and anarchists, for example, or that all members have an equal say in the operation of the blockchain. In reality, blockchain governance is a very, very complicated issue with important ethical, reputational, legal, and financial ramifications. The creators of the blockchain determine who has the power, how they acquire it, what oversight exists, if any, and how decisions will be made and enforced. A quick look at two cases, one infamous and one in progress, is instructive.
The rise of cryptocurrencies has also raised ethical concerns, in particular around the environmental impact of cryptocurrency mining and the implications of unregulated markets. Another ethical concern surrounding cryptocurrencies is the lack of regulation in the market. Unlike traditional currency, cryptocurrencies are neither backed by a government nor regulated by a central authority. It's important that all stakeholders, including developers, investors, regulators, and users, work together to ensure that cryptocurrencies are developed and used in a responsible and ethical manner.
For example, if a cryptocurrency exchange is hacked or bankrupt, investors may lose their funds with few resources. But you also have an ethical responsibility to inform your customer that the anonymous transaction will be public and to analyze best practices to avoid identification. This includes not only reducing the environmental impact of crypto mining, but also ensuring that the market is transparent and regulated in a way that protects investors and consumers. If you're interested in investing in cryptocurrency, there are resources available to help you make informed and responsible decisions.
However, investing in cryptocurrencies also comes with significant risks, as the market is very volatile and unregulated. By investing in companies that prioritize sustainability and social responsibility, investors can help create a market for ethical cryptocurrencies. The Ethics Committee recently received an inquiry about the ethical implications of a lawyer receiving cryptocurrency (Bitcoin) as payment for legal fees or as payment for the benefit of a client or a third party. If a client and an attorney agree to pay the lawyer with stock instead of foreign exchange, and the original value is reasonable at the time the parties contracted, the fact that the value of the stock rises or falls does not make accepting the shares unethical.
One factor that should take center stage is the probability that a member of the chain can be identified and what the ethical ramifications of this would be. Nebraska is currently the only jurisdiction that has issued an opinion on the ethical issues involved by the multifaceted nature of cryptocurrency. In the U.S. In the US, cryptocurrencies are considered property rather than cash, with all the attendant tax implications.
While these ethical issues are serious and important, the benefits, opportunities, and technological innovations brought by cryptocurrencies and blockchain technology should not be missed. .