The crypto craze started as a small ideological project before eventually attracting hordes of scammers and gamblers. Now, it’s been embraced by Wall Street and Silicon Valley.
Cryptocurrency is a virtual currency; its defining feature is that they are not issued by any central authority rendering them theoretically immune to government interference or manipulation.
The blockchain is a decentralized ledger of all transactions across a peer-to-peer network. The right question to be asking here is not how it works, rather if this takeover is a good thing, just as digital money took over cash.
On one hand, crypto is a good thing, and on another, it is not good. It is hard to find good information on crypto, and the information that you do see on the internet, comes from people who have a direct financial stake in getting more people to buy their coin of choice.
So, let’s start with the most common mentioned con, all the wasted energy. Look at this chart:
This chart reveals the amount of energy needed to run the Bitcoin network, just bitcoin, not any other cryptocurrency, which means that the consumption and waste is almost on par with the electricity consumption of Argentina, a whole country. (Energy Rates Canada)
Why does it take so much energy to create internet money? It’s because the security of Bitcoin and Ethereum (a cryptocurrency) depend on thousands of computers racing to randomly guess a 64-digit number first, day and night, forever. More electricity means more climate change. These computers work so hard that they wear themselves out and just die after a few years, becoming a pile of useless e-waste.
Now a valid point to make here is that yes, these computers use a lot of electricity, but not all that electricity is produced by burning fossil fuels. You’ll notice that more and more, our electricity is clean; it comes from solar panels and wind turbines. There’s even this recent survey ran by The University of Cambridge where they conducted a poll and asked: “where do you get your electricity from?” And for the crypto miners that responded, 40% of their energy comes from renewables. Crypto mining is also well-suited for grabbing energy that would otherwise be wasted. An oil facility in Utah, like many others, must burn a bunch of natural gas because it’s a by-product from their oil extraction, so instead of just burning this into the atmosphere, they put a crypto mine in a shipping container to use that natural gas as electricity.
Let’s not single out crypto for using energy, everything uses energy. The real question is whether the product merits that use. And let’s face it, we’re talking about internet money that is built off electricity and fancy math. The product is actually harmful in some respects; for instance, every week some new crypto company gets hacked or runs some scam or claims that the reason for their scam was because they were hacked. There isn’t much consumer protection, its like the wild west. There is a lot of predatory behavior. The most recent example is the Squid Game cryptocurrency. Someone decided to make a cryptocurrency called Squid, they posted this beautiful paper outlining that it was like a play-to-earn online game.
They got the hype going, the price shot up and as soon as it got high, the creator cashed out and disappeared with over $3 million dollars, scamming everyone who had invested.
This is classic casino psychology. The winners are nice and loud, and the losers quietly retreat into their shame. It all creates this impression that “everyone is getting hilariously rich and you’re not.”
When you’re investing in homes or stocks, you’re investing in something that has a track record, with crypto, you’re investing in a belief.
Those people at the top need us to buy or they lose. If you use PayPal, you might have noticed that you can now buy crypto on your PayPal app, it turns out that CEOs of those companies are personally invested in Bitcoin. So of course, they are going to make it easy for you to buy in too because they get rich if you buy in.
The upshot is, yes, it is possible to make money with this. Now it’s true, in these early days, there are lots of scams and money grabs, but that’s what happens with innovation, and eventually the technology matures.
Bitcoin connects strangers from around the world, without the need of a middleman, such as banks, who also have been making millions off our money since the beginning of time, so yes, this is useful because detaching money from big institutions such as banks and the government are useful for a lot of things.
People feel very strongly on both sides of this argument about whether crypto is a good thing, or not. As of right now it is tough to say because we are still in the early stages. Sit back, take in the information as it comes, and eventually, you’ll start to develop your own opinion.
Featured image source: https://www.pexels.com/photo/person-using-macbook-pro-on-black-table-6772076/
