Crypto: excessive environmental burden, perfect cover for organized crime, and basically a pyramid scheme. Time for a reality check. NFT then? Not fundamentally better either.
Yesterday I wrote here about what is wrong with cryptocurrencies as an investment object. But that is not the only thing that can be said about cryptocurrencies.
Waste of energy or mining
For example, there is another part that instead of trading the currency integrates vertically to process the currencies correctly. This is done through so-called crypto mining† As the name suggests, the network is “dug” to decrypt a transaction. The reward: a percentage of the value of the decrypted part. That is not investing for the long term or investing as change day, but you are earning money passively. At least, if there is money to be made.
A student from Maastricht has an entire crypto farm in Latvia. He said energy prices there have risen considerably in recent years, but are still a pittance compared to the prices we pay in the Netherlands. The biggest expense for a miner it is therefore electricity. running a simple miner that produces around €5 per day can easily cost €2 in energy per day. That’s €3 profit per day. Doesn’t sound like a grease pot. Anyway, put five of these in the basement and run them day and night, 365 days a year. That’s more than €5,000 a year he produces: a nice addition!
East miners They are mainly built in China. Mining has been prohibited there for a few years, so a new destination was sought for these second-hand machines: the West. However, there are some differences. This was the energy in China for some of these miners of hydroelectric plants, a source of sustainable energy. In the West, they are mostly powered by coal and gas plants, according to CNN. Also, the equipment was still new and clean at the time. Meanwhile, they are obsolete and inefficient machines with the necessary traces of use and lack of time†
East miners they are also flown en masse by plane. Also, they often don’t have the necessary ventilation because they are often stored in basements and attics due to noise. Finally: this miners they were used at a time when there were still plenty of chips, GPUs, and other hardware. Today, a producer of these GPUs (also called graphics cards or video cards) has to choose whether to install the chips in a crypto mineron a gaming computer or on computers for the radiology department in the hospital.
Oh yes, and also drugs, money laundering and human and arms trafficking.
The advantage of an encryption (encrypted) code is also that no one can access it. Transactions take place through a complex network of servers and proxy servers. These are all terms that are too complex for the government to figure out. And where government is stripped, it attracts sinister figures. Forbes previously wrote about how easy a transaction between a drug cartel and a human trafficker can be without anyone watching.
So it’s no longer about petty revolving door crooks or taking money from underage ‘investors’. It is a structured network of terrorism and organized crime that stimulates the trade of weapons, drugs and people (!) using encrypted transactions. However, that an innovation can be used both for the good of people and for the bad is nothing new. For example, the discovery of nuclear fission in the 20th century was not only a good invention as an alternative energy source, but, as is known, it became the origin of the two largest nuclear explosions ever observed on Earth.
CO2 neutral Netherlands? Give up cryptocurrencies!
The difference, however, is that nuclear fission has a silver lining, namely a more sustainable energy source for a cleaner climate. Crypto, on the other hand, only pollutes the environment with its hungry energy miners and transactions. In addition, they produce heat that the thermostat cannot compete with.
crypto miners they are used to execute parts of a cryptographic transaction. Encrypting part of the blockchain is an energy-intensive process. In fact, the servers used to mine Bitcoin alone would cost 0.5% of global energy consumption. That’s about 7 times more energy than the total company Google uses, according to Business Insider. A Euthereum transaction produces CO2 emissions of more than 102 kg. That equates to 227,000 credit card transactions or 17,000 hours of YouTube viewing. In fact, a Bitcoin transaction would cost four times that: 402 kg of CO2.
In short: a currency that was destined for an independent payment system is used by organized crime and fortune-seeking investors, and has an environmental impact that also offers no added value for society. But is that all? There’s no more.
Crypto, a new pyramid scheme?
the value of a currency It totally depends on the demand for the currency. When a normal investment is based on the aforementioned trading results and market expectations, there is no underlying value for a crypto. It is an uncovered position that only increases in value because there is a new buyer who prefers to hold the position than the old one.
But what if there is no next buyer? While you play convincing friends and followers of the success of the currency you just create more demand for the currency that you own. Then more people will play with you, what you and the value of you currency Benefits. The only problem is that at some point the number of new players stops growing.
As also noted in this article, the crypto system almost resembles an old acquaintance: the pyramid scheme. Courage is apparently driven by greed and persuasion. As one would-be banker wrote for Bitcoin Magazine: “Cryptocurrencies are speculative assets that can cause great harm to society. They derive their value primarily from greed, and they rely on the greed of others and the hope that the plan will go ahead unhindered.”
According to Warren Buffet, that is exactly the difference between productive assets that create value and something that someone is willing to pay more than the previous person for inexplicable reasons. However, new fortune seekers en masse continue to invest in crypto platforms like Bitvavo and Crypto.com, even though the trend appears to be over given the price drop of the past six months.
The European Union also ruled last month on the consequences of cryptocurrencies for use in money laundering and terrorist financing. As the European Central Bank pointed out, the currency therefore, there is no underlying value or physical resources that can define the value. As a result, coins thus an intangible asset and its value is determined solely by supply and demand. And there is enough demand among criminals and some fortune seekers, even though several cryptos have fallen sharply in recent weeks. Would this be the end of the crypto era, or is the hype so deeply ingrained in society that we all continue to believe in the bubble a little longer?
NFT: The Solution for Bitcoin Laggards?
But if this article and the references, reports and studies are not enough to change the minds of these wallet holders, it is not too late to enter this rogue world. For those who missed the crypto ship, there is now a new hype, based on the same blockchain and the same scandals and abuses: NFTs.
If you’re still not convinced how absurdly pointless this cryptocurrency race is, hurry up and buy virtual monkey paintings or a digital boat en masse, so this time you can be the guru or coach offering the courses to a new generation. of weak opportunists. …
Despite the fact that several brands are working on their own NFTs and that there are benefits to the music industry and the like, an NFT is still worse for the environment than making fair deals on paper. A bonus for artists and other small creators is nice, but it shouldn’t come at the expense of the weather. So the digital goal justifies the means, and that, of course, is not possible in the midst of a climate crisis.
Or be sensible and opt for a steady income with a real job and become a teacher or a caterer, because that’s what the Netherlands is really waiting for!
About the author: Bart van Eekelen is founder and director of e-pickr.
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