Main Arguments against Crypto
Good afternoon and welcome to our newsletter! Bitcoin has been steady since our last newsletter. The next two weeks have a bit of uncertainty. We have seen two large publicly traded stocks drop over 25% this week, Facebook and PayPal. Bitcoin is currently at $39,529 and the total market cap is now $1.81 Trillion mark. Remember that you can read our previous newsletters by going to our website. *Dips are for buying, It is always smart to take profits when everything is green, depending on your investment strategy! Profit is Profit*
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Energy Usage:
The question of energy use is a valid one. Bitcoin presently consumes around 110 Terawatt Hours every year, according to the Cambridge Center for Alternative Finance (CCAF) – 0.55 percent of worldwide electricity production, or roughly similar to the yearly energy consumption of tiny countries like Malaysia or Sweden. Bitcoin's energy usage is simple to calculate: simply look at its hashrate (the total aggregate processing power utilized to mine Bitcoin and process transactions) and make informed estimations about the energy requirements of the hardware used by miners.Bitcoin proponents have long argued that bitcoin mining might be the catalyst for a renewable energy shift. The logic went like this: Bitcoin miners buy the cheapest energy sources available; renewable (wind and solar) energy sources are becoming increasingly cheaper and will soon outperform thermal energy in terms of cost; bitcoin miners will thus subsidize the deployment of renewable energy, benefiting everyone.When electricity is plentiful (as it is in West Texas with an abundance of wind and solar), bitcoin miners can buy it from energy providers and draw from the grid the rest of the time. The miners are monetizing a renewable resource that would otherwise be dumped into the ground while maintaining a high level of uptime. The miners can be turned off during times of energy scarcity. As we have just seen in Texas this week (link below), almost all of the bitcoin miners have shut down to open up energy for the incoming ice storm.As a result, renewables become more cost-effective since they may monetize their asset even when there is no demand for it on the grid. This certainly sounds like a lot of energy. But how much energy should a monetary system consume?
Safety:
Bitcoin is supported by a unique mechanism known as the blockchain. The blockchain is a better technology than other financial solutions since it is based on secure fundamental concepts and cryptography. Blockchain relies on a large number of volunteers to sign hashes that employ cryptography to validate transactions on the Bitcoin network. This mechanism ensures that transactions are generally irreversible, therefore Bitcoin's data security is excellent. Bitcoin's global network, which spans the globe, includes over ten thousand nodes that keep track of all transactions. While being open to the public may not sound safe, Bitcoin's ledger transparency ensures that all transactions, even those involving anonymous parties, are visible to the public. This makes it extremely difficult to defraud or deceive the system. Because all of the data is public, there's nothing for bad actors to "hack in" and see - all transactions are visible to all. When compared to established companies' frequent data breaches, Bitcoin appears to be a lot safer.
Why not stay with the current system?
The current financial system has many flaws and inefficiencies creating larger gaps for error and for humans to take advantage of the gaps within the system. Using Blockchain technology financial transactions of any kind are more traceable than traditional banking as well as more transparent. This allows for more responsible government spending and public oversight of spending.
Using blockchain technology as well as decentralized finance provides people with the opportunity to create micro ecosystems that in turn feed the larger global ecosystem. Having taken part in the Defi space of today I am able to sense a huge feeling of independence compared to what we have been feeling– abused by traditional banks.
Some would argue that the evolution of the financial space is not a good thing for society due to the fact that in their head the current system works and has worked for the past 240 years- so why change it??
Trust
Some people argue that blockchain and the decentralized finance space lacks a sense of trust due to the fact that there is no centralized or governing power that is able to control the various decentralized protocols.
The current system relies on human trust and trust on the global banking system as a whole vs having decentralized protocols and or smart contracts that are able to enforce transactions between parties.
A lot of people typically have the notion that blockchain and the crypto space is used for illegal activity and that there is a lot of anonymity throughout the process- this is not the case, it is actually the opposite- completing transactions on a blockchain allow for exposure to one's entire activity due to the fact that all transactions are done on a public ledger for most tokens.