Vision for a Cryptocurrency Coin Primarily as a Medium of Exchange
Christopher Clayton
03/08/2024
Background - Cryptocurrency as a Fiat-Valued Asset
Given my own recent experiences with cryptocurrency, with fraud and more specifically pig butchering scams starting in 2022, and with seeing the rise of various cryptocurrencies as a fiat value-tied commodity compared to Bitcoin’s original purpose as a decentralized currency, I’ve now seen cause to lay out a view for blockchains (and associated coins) that adhere strictly to cryptocurrency as a currency (a medium of exchange for goods and services).
The only reason various cryptocurrencies are now speculative fiat-valued assets is because certain wallets acting as exchanges whose private keys are controlled by cryptocurrency platforms utilize them as such. The web mechanisms of such a platform and its fiat currency reserves tie cryptocurrency in those wallets to fiat value. This system then acts as an intermediary where an exchange is only executed on the blockchain in question between the exchange wallet and another wallet acting as buyer or seller (request for an exchange) when fiat money is exchanged at the platform-offered rate. The offered rates change in part via algorithm based on buy and sell volume. This goes for crypto-to-crypto exchanges at various offered rates as well.
This network of cryptocurrency exchanges acting as a market, however internally well-regulated, has made cryptocurrencies on offer in such ways the only de facto value proposition for them. Every other type of transaction (e.g. individual cold-storage private wallet to individual private wallet) effectively becomes "over the counter" because it makes little, or no, relative economic sense to engage in other methods when there’s already a clear fiat price structure, however unstably determined and dependent on new buyers the prices may be.
These same cryptocurrency exchanges typically allow users to make platform accounts which then generate hosted wallets for whichever cryptocurrencies the user wants to trade in, with the platform potentially being the only one that knows the private wallet IDs (not necessarily shared with the users). This has created an additional layer of trust within the entire market system. Yet cryptocurrency exchanges themselves might invest the fiat currency of users after they purchase crypto using their hosted wallets via the platform’s intermediary exchange wallet, making it potentially difficult for platforms to pay out to users who want to withdraw (the potential for "bank runs" of a sort). See the extreme example of the FTX cryptocurrency exchange’s pattern of sending funds to the related company Alameda Research for its trading use, with the results of leveraged trades creating a dependency on new FTX users (incoming funds) until the system collapsed [CNBC].
Consequences of the Fiat Valuation System for Cryptocurrency
Algorithmic trading, which has impacted the stock market before, is now apparent in cryptocurrency under the wallet custodian and fiat value-tied system. E.g. Binance and Coinbase as of March 2024 experienced difficulty keeping up with order placements vs. price updates [Coinintelegraph]. This echoes a previous incident with Coinbase in 2017 where trading was briefly paused [CNBC].
The trust inherent in such systems has led to dark net sites that also allow users to generate web accounts with public keys and hosted private keys on various blockchains, with seeming trade platform and price offer mechanisms, but which do not in practice allow the withdrawal of any cryptocurrency. Legitimate trade platforms typically say to contact law enforcement if cryptocurrency was stolen and sold on their platforms via this fraudulent misrepresentation or because of some other mechanism, with no other apparent relief outside of individual legal action (Doe Defendant or Persons Unknown cases, requiring cryptocurrency tracing and subsequent discovery/disclosure from cryptocurrency exchanges to identify the Defendants).
Government action such as the CFTC’s US District Court case against Binance for damages due to a lack of monetary controls to minimize money laundering and related activities by users, and the resulting FinCEN Consent Order # 2023-04, do not necessarily result in individual victims gaining funds back from users who funneled stolen currency through such a platform. This is also not necessarily the case with law enforcement seizures, such as large collective recoveries reported from scam operations in Thailand [Reuters]. That is, unless victims can show that their stolen cryptocurrency overlaps with the seizure starting with cryptocurrency trace evidence, then from data on perpetrators from the cryptocurrency exchanges as to where sold cryptocurrency went in the form of fiat money, and finally from bank trace evidence to make a claim for victims’ remission. To fully complete such tracing may involve law enforcement assistance in itself, which may depend on law enforcement resources in one’s jurisdiction. Victims may not be able to successfully take legal action against their banks due to local laws, even if the banks repeatedly failed to question the withdrawal of funds that were ultimately stolen via fraud [Kiro 7 for an example of wire fraud to illustrate this point].
Cryptocurrency as a Medium of Exchange in Majority
All I can conclude then is that more cryptocurrency blockchains (and associated coins) must be released which strictly adhere to acting as a medium of exchange in the majority of transactions and total units. I.e. that such cryptocurrencies can only be used internally as their own value systems to send crypto to other private wallet IDs for goods and services, with speculative exchanges for fiat value only occurring until they get detected and the wallets involved shut down in some way. Such coins achieving their own stable market exchange rates with fiat currencies due to their own internal value as mediums of exchange on their blockchains is another matter.
The question then is how a system for such a coin can be sustained and/or enforced without some wallets being able to consistently get away with acting as a web platform-tied exchange mechanism for fiat currency at speculative rates (cryptocurrency as a commodity in itself).
My first answer would be for any such coin release to have a technical custodianship entity that has direct controls over the blockchain. To me, this is what Tether.to purports to maintain to some extent in its stated ability to review its stablecoin blockchains for reported accidental sends from one wallet to another in order to effect direct recoveries [Tether]. However, they will not seemingly review to intervene in reported scams or thefts without legal Orders involved, and say nothing about wallets acting as intermediary exchanges or hosted wallet custodians.
By contrast, in my view, a central technical custodian should be able to intervene, after review and notice to wallet owners, to directly render inoperable wallets acting as fiat currency exchanges in such a way that the coin was being treated as a speculative commodity instead of a medium of exchange. Then this decision would propagate across the blockchain. To maintain the most direct democratic mechanisms possible for such intervening protocols under what otherwise amounts to a decentralized ledger system, I would say that such a custodianship should be under the control of a workers’ co-op business structure. Of course, it need not be such a structure, but I propose that as I would for any business or organization to maintain trust in the system and to maximize consensus-based decision making. Such an organization could also maintain a categorization system of what goods and services were purchased in each transaction for the maintenance of a centrally published Consumer Price Index.
The alternative, the maintenance of full and total decentralization after release of such a coin without it succumbing to speculative systems of value, to me, would be to let blockchain users make specific decisions via voting mechanisms inherent to the ledger structure. E.g. if, say, a majority of recently active blockchain users have indicated that such and such wallet should be shut down for abuse (acting as an exchange for fiat currency), then after such a majority decision propagates through the blockchain, it comes into effect (wallet in question becomes inoperable.) What happens to the coins remains another matter; perhaps they then become automatically redistributed equally among all wallets (recently active and inactive relative to executed transactions) to keep it fair. That means certain types of voting mechanisms and trigger effects need to be programmed into such a blockchain.
Users would also be tasked with entirely voluntarily classifying their exchanges accurately (what goods or services were involved), perhaps with an initial two-party agreement on the categorization before an exchange of coins takes effect and is propagated. Then users could come up with their own consumer price indices for various goods and services by trawling the public ledger, statistically analyzing the information and publishing the results. With multiple CPIs being constructed in this way by users themselves, a consensus could be reached on the average and median value of goods and services in that coin at different times.
Promotion of blockchain systems in general even as cryptocurrency-derived Internet fraud continues to run rampant - 12/17/2025
Recently on YouTube, I’ve seen an advertisement multiple times for NCA.org (the National Cryptocurrency Association). It talks about blockchains in general and how they can be helpful, stating a few high-level use cases in investment diversification and business processing. Even minor digging reveals that the organization was initially funded by Ripple, which in itself is still dealing with ongoing suits from US government agencies [The Block]. Its founding reportedly came with encouragement from Ripple for other cryptocurrency businesses to become involved with a claim that it will not be beholden to any particular company.
Even putting that part of its founding aside temporarily, the organization’s current Learn page includes all of one video (really, an audio file with a cover image) about how to spot scams which is the shortest of its video-like content without any equivalent written articles [NCA.org Learn page]. Of course, this cannot possibly describe the multiple complications with how cryptocurrency in particular can be treated and offered, the sheer number and variety of such scams and how to recover from such scams if victimized.
It’s hard for me to believe that such a strategy represents a non-profit truly interested in promoting the full nuance of blockchains through giving reasons for positive developments in spite of previous setbacks, where it very well has had time to develop a decently-extensive amount of content as it is. I.e., a learning page that almost exclusively talks about the benefits of blockchain and little about the many ways its continuing common use case (cryptocurrency) can be used for fraud and laundering schemes is not indicative of a wholistic honest portrayal in my view. This is little different than what cryptocurrency exchanges themselves tend to provide. The need for more types of blockchain protocol offerings is obvious merely from the fact that multiple large corporate players acting as cryptocurrency exchanges have faced legal cases over responsibility for their customer identification programs and centralized cryptocurrency offerings (investment-like offerings that have been under scrutiny to be legally defined as such via the Howie test in SEC cases). Internet fraud has only grown in 2024 to $~16b total in the United States alone [IC3 2025 report, page 7] with $9.3b of such losses stemming from cryptocurrency schemes [page 10]. The IC3 also started to make separate reports solely about cryptocurrency.
Again, all of this is made possible through various cryptocurrencies either being directly linked to fiat value via web-mediated exchanges (otherwise decentralized cryptocurrencies made centralized in value proposition by trade volume calculations via such websites) or via outright centrally-issued cryptocurrencies with set offered values (investment-like products). This has been the primary value proposition of cryptocurrency as a speculative commodity subject to fraud via compromised hosted wallet websites, or as an outright investment offering with a risk of such a product having little to no real value backing it at all relative to its offered price. Established token systems such as Bitcoin and Ethereum can’t exactly be changed in how they work, but the way they’ve been utilized can be differentiated from what systems with built-in accountability features might look like.
It’s one idea to offer lessons on how digital wallets work and the current uses for blockchain systems, but when a mission statement is entirely focused on promoting cryptocurrency or blockchains generally from a positive standpoint, reviewing the extensive history of harm (and why the propensity for harm has been possible) and how blockchains still currently provide value in actuality (not solely because of the public ledger technology in itself) should be extensively and exhaustively addressed. This is why in my analysis from understanding the mass harm possible from cryptocurrencies in particular (as the first primary use of blockchains/decentralized promise systems via Merkle trees) has resulted in my recommending the creation and issuance of decentralized tokens that have on-blockchain voting mechanisms to keep them publicly maintained (checks and balances) as systems with internally-relevant valuation (actual stable exchange rates with fiat currencies instead of having value reliant upon direct investment or speculative supply/demand patterns as commodities). The challenge in undoing the harms of cryptocurrency fraud/laundering alone from cases I’ve reviewed in my data privacy and policy article, and from my ongoing article on dealing with a related situation for a family member, should be reason for pause over promoting current systems without extensively critical review.
Nothing I can see from this organization so far, then, appears any more informative than viewing common information sources such as Wikipedia. To me, its founding background should include some disclosures in the least if it isn’t going to be extensively open and informative about the standing risks of blockchains due to how their most-common manifestations have been vulnerable to exploitation. However, its current privacy policy page doesn’t even mention Ripple in the least, yet it somehow also achieved 501(c)4 tax-exempt organization status (a supposed social welfare organization). The fact is that various cryptocurrencies are used as major social engineering fraud vehicles on the modern Internet and the resulting pitfalls cannot be merely addressed as something easy to avoid, just like anyone can fall for scams in general but where crypto in particular stands out most prominently within Internet fraud schemes.
Citations
1. Coinintelegraph, https://cointelegraph.com/news/binance-coinbase-crash-caused-algorithmic-trading-firms-dydx, accessed 8 March 2024.
2. CNBC, https://www.cnbc.com/2022/11/13/sam-bankman-frieds-alameda-quietly-used-ftx-customer-funds-without-raising-alarm-bells-say-sources.html, accessed 8 March 2024.
3. CNBC, https://www.cnbc.com/2017/12/22/coinbase-one-of-the-biggest-bitcoin-marketplaces-says-buying-and-selling-temporarily-disabled-amid-price-rout.html, accessed 8 March 2024.
4. Tether, https://tether.to/en/tether-token-recoveries/, Accessed 8 March 2024.
5. Reuters, https://www.reuters.com/investigates/special-report/fintech-crypto-fraud-thailand/, accessed 8 March 2024.
6. Kiro 7 Seattle, https://www.kiro7.com/news/local/they-just-let-it-happen-puyallup-woman-fights-late-uncle-who-had-3m-stolen-email-scam/NRBM7ZBCUJBG3MQ3IJQMYYB5LQ/, accessed 29 May 2023.
7. The Block, https://www.theblock.co/post/344699/the-nca-founded-with-a-50-million-grant-from-ripple-launches-education-platform-to-amplify-cryptos-untold-stories, accessed 17 December 2025.
8. NCA.org, https://nca.org/learn, accessed 17 December 2025.
9. IC3, https://www.ic3.gov/AnnualReport/Reports/2024_IC3Report.pdf, accessed 17 December 2025.
10. NCA.org, https://nca.org/privacy-policy, accessed 17 December 2025.