WHY IS CRYPTOCURRENCY BAD FOR OUR PLANET?

Most people when they learn about Cryptocurrencies they think of a ticket out of poverty but they are very damaging to our environment. But what are they and how do they work?

WHAT IS CRYPTOCURRENCY?

Cryptocurrency is a digital currency that enables online exchanges. Interestingly, the person who founded the concept has chosen to remain anonymous. Unlike physical money – it is decentralised. This means that the online currency is not anchored by a government body or bank, which means there is no one to step in if things go wrong. The fact it is decentralised has divided opinions.

Anyone is permitted to use cryptocurrency as it has no ties to an official body. Payments are logged but they are not attached to one’s identity. This has been speculated as helpful for criminal activity. People may feel they have more control over their money if there is no bank involved, but this is not the case. You are unprotected if anything goes wrong. If your money is stolen, there is not much that can be done.

WHAT IS THE MOST POPULAR TYPE OF CRYPTOCURRENCY?

The most well-known type of cryptocurrency is bitcoin. Many people are attracted to cryptocurrency because its high value is expected to increase in years to come. The value of bitcoin has fluctuated greatly. Over the course of one year, it jumped from being worth $7,000 to $55,000. The bank of England noted an increase in value by 65% in one day and a decrease in value by 25% another day.

As the metaverse and online world becomes increasingly likely, we may find ourselves more reliant on cryptocurrency than expected. Our reliance on technology makes people keen to invest in bitcoin. But how do you get your hands on it?

HOW DO YOU OBTAIN BITCOIN?

The process of obtaining bitcoin is referred to as ‘mining’. According to The New York Times, in 2009 anyone could have used a standard computer in their living room to mine Bitcoin. Now, you would need the equivalent of 9 years worth of electricity used by one household, and multiple expensive computers, totaling almost $50,000. The energy required to obtain Bitcoin skyrockets alongside the value of cryptocurrency.

‘Mining’ is how new bitcoins enter circulation. It is a metaphorical use of the word describing the process in which specific hard drives are programmed to solve a highly complex math puzzle. Multiple machines will be trying to solve the complex puzzle. When one eventually becomes successful they receive a block of bitcoins, and the process restarts.

What’s a block of bitcoins? A blockchain is a method of recording information. Blockchains can be duplicated and shared out, but they cannot be easily modified or hacked. Thinking about this in relation to money, it is obvious why blockchains are an ideal model for online money. It is an easily replicable process but it resists mutation and hackers.

If bitcoins and other cryptocurrencies are worth so much money and appear to be a vital part of our digital future, what’s the catch?

Main Image: The Economic Times