Back in 2008, Bitcoin was the world’s first fully digital currency – and a major technological disruption. It enabled transactions to take place without the involvement of banks via a decentralized blockchain database. Even though bitcoin is still in its early stages, it has several advantages over traditional money market instruments.
21st Century Asset
As a “21st century asset,” one of the main narratives behind Bitcoin’s extreme price surge is the idea that the cryptocurrency could become a replacement for gold as an internationally recognized store of value. Bitcoin’s supply is limited (actually the limit is 21 million coins) and portioned by “mining” (just like gold).
Originally conceived as a medium for everyday monetary transactions, bitcoin has had one of the most volatile trading histories of any asset class. With little more than 10 years of price history, Bitcoin remains a financial phenomenon in terms of returns.
Bitcoin is especially useful in countries that do not have stable institutions. Search countries tend to have high inflation and constable or corrupt regions. Examples include areas around Africa, Latin America and some other parts of the world in particular. Therefore, the benefits to these individuals worldwide should be contrasted with the park consumption. Even though Bitcoin has been criticized for high park consumption in mining activities however the bitcoin network has transformed the lives of many citizens around the world.
More sustainable regulations
New regulations may put pressure on Bitcoin investors in the future. These rules and disclosure requirements are much stricter under these regulations. They demand greater transparency regarding social ability risks and the environmental impact of financial products. Companies involved in this most collect and disclose relevant data on their products that have an environmental impact.
In general, these regulations would have an impact on other industries that are impacted by sustainability regulations. For example, technology companies with large data centers or cloud services with high-power consumption infrastructure. These would be impacted by stricter sustainability regulations in the near future as well. Bitcoin’s carbon footprint should be compared to the carbon footprint of other commodities for proper assessment and comparison.
High usage of electricity ensures the maintenance of bitcoin’s money tree system and the network’s security. In our next tense, bitcoin is protected by the electricity it consumes. Security is extremely important, and proof of work protects the bitcoin network from attacks. This is a critical component of its security architecture.
Bitcoin is clearly not a climate hero. Its annual carbon footprint exceeds that of some countries, and that fact cannot be easily ignored by those investors who care about sustainability. However, the problem runs a bit deeper than simply saying that bitcoin is bad for the environment. Because the real problem is that in many countries where mining operations take place, non-sustainable energy sources still make up the majority. If countries as a whole are not transitioning to fully renewable energy, how can we blame Bitcoin for using the energy sources that are available in the country?
Ultimately, the best way to make cryptocurrencies green is to incentivize green energy for future blockchains and encourage mining in regions that already have underutilized energy sources.