Understanding controversies in digital currencies: a conceptual overview

Abstract

The significant impact of cryptocurrencies on the economy has sparked debates about general acceptance and the need for regulation to strike a balance between encouraging innovation and ensuring protection and security. Studies emphasize the importance of addressing ethical issues related to cryptocurrencies and blockchain and recognizing both their opportunities and risks. Based on a qualitative approach–documentary analysis–this note proposes a critical analysis of cryptocurrencies, focussing on their drawbacks, risks, consequences and impacts. To achieve this goal, various dimensions of the controversies were addressed based on a literature review: Privacy and anonymity, regulation, illegal activities, environmental impact, speculation and volatility, the impact on investors and the overall economy, and the challenges associated with digital currencies issued by central banks. In addition, recent cases such as the collapses of Terra-Luna and FTX are analysed to underline the need for a sound regulatory framework.