If you are following the financial markets, I’m very sure you have seen or read about cryptocurrency. It is a digital currency that was created and became public available in 2009. The value of cryptocurrency is volatile and has gone up and down within a very short time period.
I’m not going to try to explain what it is because I do not have the necessary understanding how it works other than that it requires a huge amount of computing power to solve a mathematical problem. Even if I could, I would not be able to explain it in this post. For a full definition, please refer to Wikipedia on Cryptocurrency.
My career has always in banking and that means traditional ways of managing value of money. Cryptocurrency is on the other side of money where there is no value but entirely speculative. There continues to be a lot of arguments cryptocurrency is the way of future. I don’t disagree with new technology and new methods and valuing certain materials, but I do not agree with cryptocurrency and I believe it should be killed.
Before you jump on my throat in defending the existence of cryptocurrency, please consider my points below. After reading them I hope you agree with me that cryptocurrency is not an optimum solution.
Cryptocurrency such as Bitcoin does not hold any value and it is entirely speculative. The value exists when the traders buy or sell at an expected value. I understand that today’s money such as US dollars no longer pegged to gold, but the value of a single dollar can be pegged to other currencies and allow each currency to be exchange with one another. If you watch the value of Bitcoin in the last several years you will notice that its “value” swing wildly. As an example, if a dealership is willing to accept a Bitcoin and sell a car that costs $20,000. The same Bitcoin coin could worth $50,000 or $50 the next day.
Lack of Regulation
The regulators are slow in catching up with cryptocurrency. It is not because they do not understand or know of its existence. It is because they are no able to regulate it when its value lives in the cloud on a database. Additionally, now almost everyone can create their own currency have it publicly traded. We all know about Bitcoin. Now there is Ethereum, created by a teen as a hobby and Dogecoin as a joke. Additionally, cryptocurrency is preferred payment in the darkweb where online crimes take place.
The End of the World
Yes, you read the title right. Cryptocurrency could mean the end of the world. No, I’m not referring to how one could use Bitcoin to buy a nuclear bomb. I’m referring to how cryptocurrency could plunder the world into darkness because of the resources it uses to operate. For example, Bitcoin uses 13GW (gigawatt) of energy per year. It is as much as the entire country of Netherlands uses in a year. With the continuous stream of people jumping on the bandwagon to mine the coins, its use of energy will continue to go up to the point that it will overwhelm the power grid. The natural resources around the world are finite which makes mining of Bitcoin unsustainable in the long run.
Shortage of rare earth minerals is another concern as computers components are being gobbled up by the miners. Mining cryptocurrency requires a huge amount of computing power to solve the mathematical equation and to do that miners are using computer graphic cards to do the heavy lifting. There is a shortage of microchips and graphic cards worldwide today. This resulted in artificial increase in prices of these components. The downstream effect is a lot of consumers are having difficulty getting these items. It could mean life or death to some if the supplies of this commodity dries out.
Another shocker that I read recently of a new cryptocurrency on the block. Chia (no, not the chia pet) is a new publicly traded cryptocurrency. This currency can fill up over 3.6 EB (exabytes) of hard drive in just a few weeks. For illustration purpose, personal computers 30 years ago used to come with a 40 MB (megabytes) hard drive. It took that long for personal computers to come with 2 TB (terabytes) of hard drive today. Network servers usually contain petabyte of hard drives. Now imagine just a week to fill up 1 EB of hard drive.
I understand that how one would be interested in cryptocurrency because of its potential wealth that it could generate. However, I truly believe that cryptocurrency could be the downfall of modern society. The harm that it causes the environment alone should be the reason why cryptocurrency should be outlawed.
Anyone who is into cryptocurrency should heed the old saying that “If it is not broken don’t fix it”. Cryptocurrency is not revolution but it is a fix that no one asked for. Albert Einstein regretted his decision when he discovered nuclear energy because of its risk posed to the world. The creator of cryptocurrency, Satoshi Nakamoto, is claimed to have disappeared after he release his white paper. As of today, his identity remains unknow. Perhaps he felt the same as Albert Einstein.