Are crypto and blockchain safe for children, or do more measures need to be put in place?

Are crypto and blockchain safe for children, or do more measures need to be put in place?

Crypto is going mainstream, and the global younger generation, in particular, is taking notice. Cryptocurrency exchange recently predicted that crypto users worldwide could reach 1 billion by the end of 2022. Other findings show that Millennials – those between the ages of 26 and 41 – are turning to investing in digital assets to build wealth. For example, a study conducted in 2021 by the personal loan company Stilt found that according to its user data, more than 94% of people who own crypto are between the ages of 18 and 40.

Ensuring the safety of children

While the increased interest in cryptocurrency is notable, some are concerned about how under-18s interact with digital assets. These challenges were highlighted in UNICEF’s recent report ‘Prospects for Children in 2022’, which examines the impact that global trends can have on children, including concerns about the widespread adoption of cryptocurrency.

Melvin Breton Guerrero, policy specialist for UNICEF’s Office of Global Vision and Policy, told Cointelegraph that he wrote the report’s section on digital currencies. According to Guerrero, this part of the document is very relevant because the cryptocurrency industry is still developing and therefore requires protections for children:

“We must take steps to prevent harm to children that could be caused by third parties using cryptocurrency or by self-inflicted harm. As such, we need to prepare children under 18 for a future where cryptocurrencies and blockchain applications are part of everyday life, just like the internet.

While there are no official safeguards in place for children when it comes to accessing crypto and blockchain apps, Guerrero explained that one of the most important factors to consider is age verification. “We need to make sure that miners don’t wrongly engage in blockchain applications or misuse cryptocurrencies,” he remarked.

Given the anonymity of cryptocurrency transactions, Guerrero realizes that anyone can set up and access a cryptocurrency wallet. He added that some online cryptocurrency exchanges do not question the age of their users. “A child can transact using various crypto wallets, and nothing can be done,” Guerrero said.

While there are technically no age limits when it comes to crypto, most major cryptocurrency exchanges have Know Your Customer (KYC) requirements to ensure users are 18 or older. For example, the Coinbase website explicitly declares that users must be 18 or older to access its services. Prior to the implementation of this policy in July 2017, however, Coinbase allowed users who were at least 13 years old to access its services with parental consent.

It is also worth noting that the US-based cryptocurrency exchange Gemini offers custodial accounts for miners. A business blog post published January 25 explains that the new service is powered by EarlyBird, a holding company of the Gemini Frontier Fund, and allows parents to invest in their children’s financial future.

Caleb Frankel, co-founder and COO of EarlyBird, told Cointelegraph that the offering is focused on providing access to digital assets so parents can invest on behalf of their children:

“Each account is owned by a parent or guardian over the age of 18. We believe crypto is part of a modern balanced portfolio and prioritize educating families and the next generation of investors to as digital asset markets mature.”

Frankel added that EarlyBird not only works with Gemini, but also proactively with regulators to ensure the development of a safe and secure crypto ecosystem. While progress is still being made, Guerrero said it’s important to ensure new wallets are always created by someone of legal age. Even if kids don’t create the wallets initially, Guerrero thinks it’s a solution to ensure they’re using crypto funds correctly.

Unfortunately, other challenges can also arise when children have access to cryptocurrency. For example, 2021 has seen an increase in crypto scams, and kids inexperienced in the industry are likely to be more vulnerable. Larry Cameron, Chief Information Security Officer of the Anti-Human Trafficking Intelligence Initiative (ATII) – an organization focused on combating human trafficking by monitoring cryptocurrency transactions – told Cointelegraph that There are many risks to consider when kids get into cryptocurrency:

“Namely, scams and fake platforms are risks for minors. Online predators are experts at finding inexperienced people and exploiting them. Data breaches, identity theft or fraud can be committed in the child’s name without their knowledge. Children are also more likely to lose a private key, but it happens even to adults.

As such, Cameron believes the acquisition of digital assets will make children a target for criminals. “Until crypto exchanges collectively add more verification and authentication measures when opening an account, the privacy of children will be at risk. Ideally, anyone under the age of 18 should provide documents from his parents as authorization to open an account,” he noted.

Is blockchain a double-edged sword?

In addition to cryptocurrency concerns, blockchain technology can also have unintended consequences for miners. For example, Guerrero explained that blockchain could be harmful to children because the information recorded is permanent and immutable, and this immutability could conflict with current regulations:

“The European Union’s ‘right to be forgotten’ is found in Article 17 of the General Data Protection Regulation, or GDPR. This means that children who voluntarily provide their information when they do not necessarily understand the consequences should have the right, when they reach the legal age, to have that information deleted. But the blockchain, by definition, does not allow the deletion of information. So how can we protect children’s data in this case? »

Additionally, Guerrero pointed out that while blockchain apps could help migrant children have a wearable identity to access goods and services, they could also be used as a form of surveillance. Given these concerns, he emphasized that there needs to be a balance when harnessing the benefits of blockchain technology: “Having that balance is important, and the blockchain and crypto community needs to keep that in mind when creating new applications.”

Fortunately, some organizations are making progress on this front. For example, while UNICEF has recognized the challenges associated with digital currency adoption and children, the organization is aware that blockchain technology can be used for good.

Sunita Grote, head of the enterprises team at UNICEF’s Office of Innovation, told Cointelegraph that her office is exploring the use of blockchain through its venture capital fund. “This fund provides seed funding to test open-source solutions that have the potential to accelerate outcomes for children. Blockchain is one of the technology areas we are exploring,” she said.

Specifically, Grote believes that blockchain-based solutions allow organizations and individuals to rethink how problems can be solved due to their increased transparency, system efficiencies, and better coordination of data between several parts. With this in mind, Grote understands the potential blockchain can have when it comes to addressing threats to children in the online environment. She shared that the UNICEF venture capital fund recently invested in two startups developing AI-powered open-source solutions to address digital risks for children.

On the other hand, Grote also understands that blockchain could increase children’s risk of exposure and harm online: “Being online can amplify the traditional threats and harm that many children already face offline and can further increasing vulnerabilities with online risks also present.”

Calling on the blockchain community to protect children

Given the risks associated with crypto and blockchain when it comes to minors, Guerrero mentioned that it is up to the blockchain and crypto community to help ensure the well-being of children in the to come up. “The blockchain and crypto community should use their deeper technical understanding to actively engage with the child rights community,” he remarked.

As a solution, Guerrero believes blockchain applications should have built-in KYC requirements. This may be easier said than done, as he also believes KYC remains an open question for crypto wallets and exchanges. Although KYC requirements can be challenging, Guerrero noted that having more educational tools will benefit the well-being of miners who get involved in crypto and blockchain. This may be a more realistic solution at this time, as several educational initiatives are already underway.

For example, in 2021, Gemini partnered with Learn & Earn, an app that teaches students financial literacy while earning fiat rewards. In addition to exchange initiatives, some governments are taking it upon themselves to teach young people about crypto. Last year, Colombia funded a mobile app, board game and book designed to educate young people about investing in cryptocurrencies and the stock market.

Other organizations are also developing additional educational projects. Aaron Kahler, Founder and CEO of ATII, told Cointelegraph that ATII regularly hosts child safety training sessions and conferences on how to keep minors safe when interacting with digital assets and blockchain applications: “We are hosting a summit on the subject in May which will include a “black webathon” and a child safety day. We are also bringing people from law enforcement and other organizations to talk about child safety.