Vision for a Cryptocurrency Coin Primarily as a Medium of Exchange in a Consistent Manner
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.
Continued impact of hacking events on centralized wallet systems and infrastructural implications - 10/30/2026
Following a number of high-profile hacks against centralized wallet systems, finally Binance.com suffered from one [Yahoo! Finance]. Yet again it is postulated to be from North Korean-affiliated hackers based on trace data. This has also caused a temporary freeze in withdrawals which as I said before is necessarily a general persistent risk in the hosted wallet space (access can be taken away by the hosting web-mediated benefactor).
That article in particular focuses on the impact of such an event on Bitcoin’s price as a commodity future/asset and why there is more confidence in the price now versus previous hacks, but the problem remains the same. As soon as hot supply wallet and hosted wallet pioneers attached publicly-exchanged blockchains (namely, Bitcoin) to web-mediated systems in order to allow them to be priced as commodities relative to fiat-valued assets to create a well-regulated (even if speculative) market, bad actors could then proceed to figure out ways of intercepting cryptocurrency on a mass scale or exploiting wallet protocols in ways which were not possible across a fully decentralized blockchain (‘over-the-counter’). Besides business expansion tactics in the space including heavy use of off-shore jurisdictions to say the least and an enduring attitude that various cryptocurrencies are not fiat instruments while effectively treating them as such anyway, creating more of these institutional risks as well as aiding the flow of dirty funds (money laundering).
This to me only speaks to a greater and greater need for truly decentralized cryptocurrencies that have internal mechanisms to keep them ‘over-the-counter’ as such, akin to fiat currencies (with stable exchange rates and the resulting ability to construct consumer price indices of sorts) to compete with what has happened to Bitcoin, Ethereum, etc. North Korea in particular is still a pariah of the global fiat value financial system, but cryptocurrencies that have been treated as fiat-valued assets straddle the boundary between fiat financial systems and blockchain valuation systems for exploitation because of the website-mediated systems. It’s no surprise then that it and its affiliated actors will continue to innovate in the space of exploiting hosted wallet/cold to hot supply wallet transfer systems to engage in theft events across such cryptocurrencies (harvesting hosted wallet private IDs via website platform hacking events, manipulating market prices via mass buy/sell transactions using taken-over accounts, etc. as reviewed in the Yahoo! article).
The largest cryptocurrency platforms have large war chests (even if not entirely disclosed in amount due to many of them acting as privately-held companies) and having emergency funding partners, unlike what occurred during the Mt. Gox incident which then led to that platform’s bankruptcy. However, the enduring feature of the platform business strategy regardless is the making of money (transaction fees, speculation, etc.) off treating certain cryptocurrencies as commodity futures via web-mediated mechanisms (hot supplies, hosted custodial wallets). The risk of sophisticated rogue actors exploiting the space will persist. This is very different from Bitcoin, when it was largely an on-blockchain digital currency, being theorized as only being truly exploitable in the event of one private wallet gaining control of 51% of all existing coins in a given period.
The baseline needs of a decentralized cryptocurrency involve at least creating a Merkle tree algorithm for the creation of private wallets and public IDs and to allow the exchange of cryptocurrency between any given two wallets with verification by another wallet acting as third-party to a given transaction before decentralized propagation; and an algorithm for determining under what conditions coins are created and verified as truly new coins to be propagated on the blockchain (‘mining’). However, as I described before, there also in my view has to be an ability for transactors to agree on the categorization of a given transaction alongside a verification procedure to make a CPI-type index possible. Then besides that, additional tree algorithm procedures for verifying and propagating certain types of votes across the blockchain such as calling out certain wallets as hot supply wallets for web-mediated infrastructure in order to shut such wallets down democratically are necessary (decentralized method of keeping the cryptocurrency coin itself decentralized and acting as a true currency).
Programming anything like this is beyond my ability without further study, and such a coin would then need to be promoted towards achieving adoption on a mass scale to be taken seriously as a currency. However, ultimately, I see at least one such coin as a necessity in the market at some point to counterbalance what has occurred with the major publicly-exchanged blockchains; which incidentally then led to other schemes such as centrally-issued tokens (direct investment-like security products and associated frauds due to the lack of public market valuation mechanisms).
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.
11. Yahoo! Finance, https://finance.yahoo.com/markets/crypto/articles/binance-hack-why-bitcoin-didnt-184503731.html, accessed 30 October 2026.