The use of cryptocurrency is a challenge to the world's core ethos, the idea of individual liberty and freedom from excessive governments oversight of our private lives. A cryptocurrency could be used more often; however, we have to remember that it is not the same as a digital currency.
The crypto industry's growth is due mainly to the need to protect liberty against massive data collection by government and large technology companies. Cryptocurrencies are different from digital currencies because it operates through a blockchain. This allows peer-to-peer transactions and has distributed record-keeping.
Each transaction is conducted without the involvement of any third party, like paper fiat currency or a digital currency that is issued and distributed by a central entity - the government, central bank - who has access to its usage and its use. It can be seen as the ultimate tool to gather information about individuals.
Cryptocurrency can be used to alleviate the fear of losing freedom when someone knows all about you and can interpret your actions in a way that is different from yours. Cryptocurrencies will be a vital part of a digital world, especially in the United States, where liberty is the foundational ethos.
However, not all cryptocurrencies are created equally. Here are two examples: Ethereum and Bitcoin. Because of its vast energy consumption, Bitcoin is the loser. Bitcoin mining currently consumes 10x more energy than Ethereum. Ethereum is aiming to reduce its energy use by 99% in the near term. This ratio of 10:1 will soon be 1000:1.
One of the strongest arguments for a new monetary system, according to many experts, is to allocate scarcer resources. Failing to do this would result in a real existential crisis for humanity. We wouldn't have the infrastructure to generate renewable energy on a global level.
We must make the transition to a world dominated by renewable energy before scarcity becomes an insurmountable problem. Resources must be managed carefully to achieve this, and Bitcoin must meet this urgent need.
Bitcoin mining source is indeed only a tiny fraction of global energy consumption, at around 1%. However, some energy sources are more valuable than others. Bitcoin mining is entirely dependent on electricity.
This is an enormous cost in the Bitcoin ecosystem. Therefore, Bitcoin miners will try to find the lowest-cost electricity possible. This means that the majority of electricity Bitcoin uses will be applied generated from renewable energy or hydropower.
Granted that electricity accounts for approximately 15% of energy use and that low-cost electricity – hydro and renewables – amounts to less than a quarter of electricity use, Bitcoin appropriates about 3% of that portion of energy devoted to producing renewable energy energies.
Using cheap energy sources on anything other than creating renewable energies raises the cost of producing renewable energies. Bitcoin significantly lowers the chances of reaching the goal of 100% renewable energies. That is why Bitcoin, in contrast with Ethereum, is a pragmatical threat.
Another advantage of Ethereum is its peer-to-peer exchange mechanism. This allows for exchanging a variety of other items, including contracts and proprietary computer programs. This provides additional privacy protection.
Cryptocurrency, for the sake of our civilization, needs to be a gold-linked monetary reserves system. The proper cryptocurrency is also essential to ensure a vibrant society that can enjoy this wealth.
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