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Although financial abuse is much a much-less discussed aspect of domestic violence than physical, psychological or sexual abuse, it is just as common. In fact, researchers believe that close to 99 percent of domestic violence survivors are financially abused. Financial abuse encompasses a partner handling all the cash and financial accounts and denying survivors access to them, among other actions.
Financial abuse can pose a huge barrier to leaving an abusive partner, just because survivors may not have access to cash or bank accounts. While strategies to avoid financial abuse include hiding cash with a friend or family member or trying to open one’s own accounts secretly, cryptocurrency entering the mainstream now provides another viable option.
“Cryptocurrency and blockchain offer a new way for people to store and transfer money without the need to be connected to the traditional banking system,” says Claire Hunsaker, a chartered financial consultant and the chief executive officer of AskFlossie, an online financial community for women. “This independence and privacy could be valuable for people experiencing financial abuse, who may not have access to traditional financial accounts or may need immediate access to funds.”
Cryptocurrency and Blockchain Explained
Cryptocurrency is a type of currency, just as dollars and pennies are. However, it is an entirely digital currency, made very secure by cryptography. That’s the first thing that makes crypto potentially a boon to domestic abuse survivors. There is nothing physical that needs to be secreted away, as there is with cash, cards or bank statements.
People buy, sell and manage their cryptocurrency mostly through personal accounts set up on online platforms called “exchanges” and “digital wallets.” Access to your account and use of your cryptocurrency is conducted entirely digitally on exchanges and digital wallets. You’ll receive a password or other digital security identifiers when creating an account and you’ll want to keep this information private so no one can access the cryptocurrency but you.
Of course, if an abuser is skilled at accessing your accounts or getting passwords from you, this may not be a good choice. Survivors should assess the risk based on their experiences with the abuser. As crypto is not protected, once the password is known, survivors can't recover the loss if an abuser raids the account.
Blockchain is a distributed digital ledger that records all cryptocurrency transactions in blocks of data. Each block is independently confirmed. It’s more secure than a bank statement that records checks and withdrawals made at that bank. Only users verify it, rather than a financial institution.
Like cryptocurrency, blockchain exists only in the digital world; physical copies don’t exist. So you don’t have to worry about statements arriving in the mail or lying on the kitchen table. It’s good to know about the blockchain, though practically speaking, it is not something you’ll knowingly encounter when buying, selling or managing your cryptocurrency.
How Can You Use Cryptocurrency?
Despite what you may have read in the headlines, there are easy ways to use cryptocurrency almost anywhere to buy goods and services digitally. You could, for example, buy groceries at your local store or make an online purchase using cryptocurrency in many places.
This can be done using a debit card that many exchanges offer and will issue to you. When you use your exchange debit card, the merchant automatically receives fiat currency, or dollars in the case of buying in the U.S., and an equivalent amount of cryptocurrency is deducted from your exchange account or digital wallet. The challenge with debit cards, of course, is that they are physical objects and keeping them secret from an abuser is paramount.
There is also a growing number of merchants who accept payment in cryptocurrency. Making online purchases with cryptocurrency-accepting merchants is very similar to making any online purchase. Making purchases with cryptocurrency-accepting brick-and-mortar retailers can be done through your digital wallet using QR-code scanning.
It’s also possible to convert the crypto you hold into cash. The first method is to cash it out and transfer the money to a bank account or credit card. If you need cash, Bitcoin ATMs exist in many areas. (Bitcoin is the most common cryptocurrency.) Be aware, though, that not all Bitcoin ATMs dispense cash; their initial purpose was to enable the purchase of crypto with cash. (In other words, they are not completely the same as bank ATMs.) You’ll need to research Bitcoin ATMs in your area to find out whether you can get cash from them. The ATM will need to authenticate your crypto account as well. Bitcoin ATMs also charge hefty fees.
Merchants may only accept some of the most common types of crypto. There are many, many different cryptocurrencies; if you think that you want to purchase items with cryptocurrency, familiarize yourself with what apps and stores accept.
Second, you can use it as a type of savings, purchasing a certain amount of cryptocurrency and holding it on the exchange. Then, you can cash it out when you’re ready. Note, though, that you may need to connect to an existing financial account to do this.
Cryptocurrency Pitfalls to Watch Out For
Cryptocurrency offers the very real advantages of privacy and security that can help domestic violence survivors. But there are also some potential pitfalls to consider.
First, most cryptocurrencies are subject to volatility. This means the price continuously fluctuates, just as the price of stocks do. In other words, if you purchase $1,000 of cryptocurrency and want to sell it on an exchange a year down the road, the amount might be more, or it might be less. It all depends on how the crypto trades between the time you buy it and when you want to use it. You may well end up with less money than you purchased.
There is a category of cryptocurrency called “stable coins” that are designed to avoid volatility. One such example is USD Coin or USDC and it is pegged to the U.S. dollar on a 1-to-1 basis, meaning one USD Coin is almost always worth about 1 U.S. Dollar.
This is probably a good time to mention that there are upwards of 20,000 different cryptocurrencies in the world. Nearly all should be avoided and it is considered less risky to purchase and use the more tried-and-true like Bitcoin and Ethereum, as well as USD Coin and a few other top coins. These coins have more widespread acceptance and practical, everyday use, as well.
Secondly, cryptocurrency is not regulated by the government like banks are, and there are few protections. Banks and credit unions, for example, guarantee deposits against loss up to a certain amount. Crypto exchanges don’t. Similarly, there is no fraud protection. Clair Hunsacker notes that “When crypto is gone, it’s gone. Unlike a credit card, where you have some fraud protection, if you transfer money to someone who you shouldn't have, there is little you can do.”
Third, crypto is not legal in all countries. It is in the U.S., Canada and Europe but not, for instance, in China. If you plan to travel, check to see whether you’ll be able to use crypto.
Taking the Plunge: How to Buy, Sell and Manage Cryptocurrency
You can buy, sell and manage your cryptocurrency on an online exchange. The term “exchange” is industry jargon for websites that offer companion smartphone apps and digital wallets, all of which facilitate your cryptocurrency activities. The three most active exchanges are Binance, Coinbase and FTX.
To get started, you’ll need to set up and verify your account, not dissimilar from setting up accounts on other websites, so take precautions to make sure the abuser cannot access your account, see your Internet history or notice an app on your smartphone.
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Once you have an account set up, you will then need to transfer money into your account in order to buy cryptocurrency. Exchanges accept transfers from bank accounts and deposits from credit and debit cards. In the scenario where the abuser is monitoring your bank and card accounts and would notice this transfer, there is a way to buy crypto with cash by using a Bitcoin ATM. There are more than 32,000 Bitcoin ATMs in the US and you can find locations here. Often these ATMs are located at convenience stores and they are remarkably easy to use. This how-to video from Bitcoin Depot, the largest network of ATMs, explains the process.
You can set up a crypto account using the Cash app or PayPal, according to Hunsacker. “Crypto can easily be managed through mobile apps,” she notes, “which may make it harder for an abuser to access your account. If you are paid in crypto or receive help from friends and family in crypto, it may be easier to hide this from an abuser who is monitoring or controlling your bank account.”
Be sure to thoroughly research the type of cryptocurrency and think carefully about whether cryptocurrency is right for you given the advantages and risks involved.
Interested in donating cryptocurrency to support victims and survivors of abuse? DomesticShelters.org accepts over 70 forms of crypto as tax-free donations.
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