The Mainstream Narrative Switches from Volatility to The Environment in Latest Attempt to Stop the rise of Bitcoin.
If you had asked me two years ago what I thought about cryptocurrency, particularly Bitcoin, I would have probably had the same reaction as most people today. The consensus is that Bitcoin is a volatile investment at best. At worst, it is considered a quasi-toy-currency created by a few nerds.
Six months ago, I began speaking to a friend who had gotten themselves quite deep into the crypto rabbit hole. In 2016, they pulled all of their investments and ploughed them all into Bitcoin. There were discussions about how my friend had lost his mind and put his entire family at risk based on a ‘whim’. Fast forward to today, and my friend’s coins (purchased originally at around $1100) have increased to almost seventy times their original value. I know for a fact that my friend’s investment was at least $10,000. You do the math.
I knew I was late for the party. The chance of making seventy times my investment at this point was pretty much nothing, but I did some research anyway. I learned how significant financial minds were investing in Bitcoin with no intension of selling in the near future (or at all ).
“I think bitcoin is really on the verge of getting broad acceptance by conventional finance people,” Elon Musk
I started to look even deeper down the rabbit hole. While I am no expert, it is easy to understand that cryptocurrencies like Bitcoin and Ethereum are more than simple investment opportunities. They are viewed by many as leaders in the field of blockchain and distributed ledger technology. This fact makes them a considerable threat to the current financial system.
According to CB Insights, blockchain technology and DLT have a massive opportunity to disrupt the $5T+ banking industry by disintermediating the key services that banks provide, including:
- Payments: By establishing a decentralized ledger for payments (e.g. Bitcoin), blockchain technology could facilitate faster payments at lower fees than banks.
- Clearance and Settlement Systems: Distributed ledgers can reduce operational costs and bring us closer to real-time transactions between financial institutions.
- Fundraising: Initial Coin Offerings (ICOs) are experimenting with a new model of financing that unbundles access to capital from traditional capital-raising services and firms.
- Securities: By tokenizing traditional securities such as stocks, bonds, and alternative assets — and placing them on public blockchains — blockchain technology could create more efficient, interoperable capital markets.
- Loans and Credit: By removing the need for gatekeepers in the loan and credit industry, blockchain technology can make it more secure to borrow money and provide lower interest rates.
- Trade Finance: By replacing the cumbersome, paper-heavy bills of lading process in the trade finance industry, blockchain technology can create more transparency, security, and trust among trade parties globally.
- Customer KYC and Fraud Prevention: By storing customer information on decentralized blocks, blockchain technology can make it easier and safer to share information between financial institutions.
It is no wonder that certain powers are moving against the rise of cryptocurrency.
Those of vested interests seem to fall into several categories. Some see the value of having a decentralised system of finance and are openly investing in crypto. Then, there are those heavily leveraged into the US dollar and the current financial system who seem to be doing everything in their power to continue the narrative against bitcoin. Most interestingly, though, there are those who, whilst heavily invested in the current system, continue to weigh up their options. Does this imply that they see the inevitability of the shift?
Are those that continue to drive their narrative against Bitcoin beginning to clutch at straws? With the recent coming out by billionaires such as Elon Musk and the subsequent 1.5 billion USD investment by Tesla, the dated narrative that Bitcoin is untrustworthy and volatile may have run its course. So, now, is a story about environmental disaster being pushed instead?
The billionaire Bill Gates was one of the first to point out the fact that Bitcoin mining has a tremendous carbon footprint.
Gates has been a vocal non-supporter of Bitcoin for some time. Now though, the story has been eaten up by the mainstream media with relish. News outlets across the world are lashing out at Bitcoin for its carbon footprint. The story itself has gone straight to the top, with even President Joe Biden cashing in on the opportunity to slate the worlds most popular cryptocurrency.
President Biden’s top economic adviser described Bitcoin as “an extremely inefficient way to conduct transactions,” saying “the amount of energy consumed in processing those transactions is staggering”. (BBC)
The carbon footprint in question is due to blockchain, which relies on it’s spread between many users across the world to establish its security and protection against exploitation. But, for many people, the very fact that the US government is making such statements implies that Bitcoin is a threat to the system itself. Some might say that the latest narrative is opportunistic, taking advantage of people’s misunderstandings of Bitcoin and blockchain completely.
This story seems to imply that Bitcoin has a choice in the method used to generate its power. Yet, Bitcoin is dependant on its users. Its users are dependant on the grid, and the grid’s carbon footprint depends on the methods used to generate the power.
World powers still seem to favour fossil fuels. With their refusal to bring in respectable emissions targets, it is almost ironic that they are using environmental concerns to bring down the threat.
Is Bitcoin being made a convenient scapegoat for a global issue that involves everybody?
After all, we don’t see such scrutiny over other commodities. Gold mining has been questioned for its carbon footprint, but it doesn’t seem to make the mainstream news in such an extreme way as this.
Investors are putting pressure on gold miners, whose high greenhouse gas emissions have been less scrutinized, to report transparently and take concrete steps to curb them after a rally in prices this year drew closer attention to the sector’s footprint.(Reuters)
Comparisons in the media to the carbon footprints of single companies such as Facebook or Google don’t make sense since Bitcoin is not a single company but a vast network. Comparing Bitcoin to single countries also does not make sense since it is an international network of computers. Perhaps a more accurate comparison would be to compare the mining of bitcoin to the internet itself?
When we look at the power being consumed by Bitcoin mining, we need to look at how that power is being generated rather than how much power is being used.
The rise of technology in the world is inevitable, and major countries’ refusal to take urgent action in the switch to renewables is unacceptable.
Bitcoin is not the issue here. The problem is the way we are consuming energy on a global level. Having no single body administering the financial system means that no one can manipulate that system. It means the end of a corrupt game that the financial institutions have played for a long time. The very nature of blockchain means that the ‘ledger’ must be stored on many computers worldwide. That will always mean more power usage. The issue at hand is not the energy used but how that power is being generated. After all, in a world that relies entirely on renewables for its energy, would this even be an issue?
This article is a collection of ideas by the author. It does not constitute facts or advice in any form