Should You Be Investing in Cryptocurrencies?
As with most things in life, it seems that this issue is far more complex than it seems. Of course, there are going to be people on both sides shouting “Yes!” and “No!” at the same time while saying it’s obvious all in the same breath.
But, when it comes down to it, there are far more things to consider than whether you are going to make a quick buck from investing in the latest digital coinage. There could be severe real world consequences to what you choose to support or invest in.
Now, many of you may be thinking that you should just switch tabs back to PlayCroco casino and ignore me. Your friend has made a good stack of cash from Bitcoin, or your uncle’s cousin was able to buy a car because he invested.
However, I implore you to think about all the possible consequences of your actions. There is a darker side to the cryptocurrency industry, and it is having real world and possibly devastating effects on the world right now!
Now, although, as I will explain later, cryptocurrency could be having quite negative effects on the world, I don’t want you to take me for some sort of doom seer. I’m not saying cryptocurrency is the root of all evil, and should be destroyed.
However, I just think it is important to be informed as to what effects you could or could not be having on other people’s lives or the world.
What is Cryptocurrency?
Before we get into other things, I think it is important to discuss what cryptocurrency is in order to be more clear about what it is we are speaking about.
According to Forbes, “Cryptocurrency is decentralized digital money, based on blockchain technology.” This essentially means that it is a form of money that is not based on a government or central bank.
Forbes continues to give a good explanation of how cryptocurrency works by saying, “A cryptocurrency is a medium of exchange that is digital, encrypted and decentralized. Unlike the U.S. Dollar or the Euro, there is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are broadly distributed among a cryptocurrency’s users via the internet.”
This means that even if your government collapses, or your countries economy goes down the drain, your Bitcoins or whatever other kind of cryptocurrency will still be worth just as much as they were before that happened.
This is a big bonus for people who support cryptocurrency. It is a relatively stable form of currency and is unaffected by what is going on in your local economy. Its value is given to it by people globally, so it has a universal global value.
Positives of Cryptocurrency
Before we get into some of the more negative sides of cryptocurrency, I will speak about the positives that supporters of cryptocurrency like to tout.
First of all, cryptocurrency is completely anonymous. If you buy something with a form of cryptocurrency, you can make payments without anyone ever knowing who you are.
Sure, some people will say that only criminals would want that (and yes, obviously, there are going to be criminals who will use this to their advantage) however, that shouldn’t be a reason to put down regular law abiding citizens who want to do anonymous transactions.
In today’s day and age where it is becoming ever more difficult to have really any form of privacy, I don’t blame people who want to be able to do things without someone taking a peek at what they buy or what they do.
Some people just want to live a private life, and don’t think it’s anybody else’s business what they choose to buy, or what they choose to do. And, if I am being honest, I can’t say I blame them.
Another positive that people put forth in support of cryptocurrencies is that transactions are much faster (especially international transactions.) Because you don’t have to worry about currency conversions or the usual rigamarole that banks will do with your money, crypto transactions can be faster.
However, it seems as if that might be more complicated than it seems, as not everyone agrees that crypto transactions are faster than regular bank transfers.
Finally, people like to say how crypto transfer fees are less than that of banks. This is true even more so for international transfers, as you don’t need to pay the government or the bank to translate your money from one form of currency to another.
Negatives of Cryptocurrency
While most of the positives of cryptocurrencies lie on the “money” side of the coins, as if to say that you will find the most benefit from cryptocurrencies as a currency, the negatives mostly lie on the under the table side of cryptocurrency.
By this I mean the negative effects cryptocurrency has had on the environment and the tech industry as a whole. There have been many negative occurrences that have happened within the last couple years that are commonly attributed to crypto mining.
First and foremost are the negative effects cryptocurrency has had on the environment. Crypto mining consumes an incredible amount of power, which means that more fossil fuels have to be burned to support that power need.
Although crypto mining does get a large portion of its power from renewables such as wind and solar, it is is still less than 50%, which means a large portion of its power consumption is going to be from fossil fuels.
As we know, fossil fuel power generation has quite a negative impact on the environment. From the destruction of habitats from improper mining of natural resources to the large amounts of greenhouse gases released when they are burned, it is far from a good source of power.
Another big problem that has been attributed to cryptocurrency mining is the current global silicon shortage. Silicon is an incredibly important semi conductor used in essentially all electronics manufacturing.
However, large portions of the GPUs and other computer components have been being bought up by cryptocurrency miners in order to mine for more cryptocurrency such as Bitcoin and others.
This leaves shelves empty, and average consumers who are looking to buy computer components high and dry. It is currently still several times more expensive to buy computer components such as GPUs and CPUs than it was a few years ago.
That is, of course, if you can even find those components to begin with. Usually, they are bought up and go “faster than hotcakes” as they say.
Despite all this, you cannot blame only cryptocurrency miners for the computer component shortages. That is a very large and very political issue that goes beyond people trying to make money off of the latest crypto coin.
But, it certainly hasn’t helped the issue, so I think in today’s market it is worth mentioning.
Now, all of these issues can be compared to other industries and forms of banking and they might not seem as bad. However, that is the fallacy of “what about-ism.”
Just because something is worse than what you are currently doing, doesn’t make what you are doing good. Stay informed, and make the best decisions based on the information you have!