It is hard for me to write this because I love the blockchain, but I hate the hype around cryptocurrencies.
Well, there is really only one cryptocurrency that attracts all of the attention, and it is Bitcoin. The rest, even Ethereum, are merely hangers-on to the Bitcoin phenomenon.
While Ethereum does serve a very important infrastructural purpose for practical blockchain uses itself, I don’t want to delve too deeply into this here lest I bore non-blockchain people to tears. For the sake of this discussion, we will focus on Bitcoin.
Bitcoin, in case you don’t know, uses an absolutely crazy amount of energy. The “miners” of Bitcoins are the ones using the inordinate amount of energy. Actually, the Bitcoin community uses just a little more energy than Argentina does each year.
“What (the miner) is actually doing is trying to be the first one to come up with a 64-digit hexadecimal number (a “hash”) that is less than or equal to the target hash. It’s basically guesswork” (Mining).
The first miner to guess the number is rewarded with a Bitcoin. As Bitcoin prices continue to daily set new price records, it is now up to $58,000 for one Bitcoin, more and more miners around the globe seek to take part. This means that in order to be the first to solve the “riddle” of sorts, trillions of guesses must take place. This means that millions of computers are working 24/7.
“‘Bitcoin is literally anti-efficient,’ David Gerard, author of Attack of the 50 Foot Blockchain, explained. ‘So more efficient mining hardware won’t help — it’ll just be competing against other efficient mining hardware. This means that Bitcoin’s energy use, and hence its CO2 production, only spirals outwards. It’s very bad that all this energy is being literally wasted in a lottery’” (Bitcoin Consumes)
If Bitcoin was somehow putting a dent in the growing income inequality, then we might want to consider how to make it more sustainable for the sake of humankind — it’s not. It is actually exacerbating this problem. Another reason I dislike cryptocurrencies so much is because it is a “community” filled with people obsessed with money. Money for the sake of money is their raison d’etre, and it does not matter to them how that money is made; or, in this case harvested.
Amazingly, Elon Musk, considered by many to be one of the great saviors for the environment as his electric-powered cars gain cult status, is very heavy in Bitcoin. The US government gave him a $1.5 billion environmental subsidy, and then he turned around and bought $1.5 billion worth of Bitcoin — that purchase inflates Tesla’s overall footprint by increasing its “indirect emissions.”
Tesla is a company that markets the future; the company says that its purchase of Bitcoin was an investment; an investment, in what, though? Surely, not the future. Accepting Bitcoin’s “proof of work” model for mining, which is responsible for its outrageous energy consumption, is exactly the kind of hypocrisy that has led us to the brink of our climate Armageddon.
Bitcoin’s process will eventually change, especially if a carbon tax is applied; like many other cryptocurrencies, it might move away from the proof of work model; but nevertheless, until that happens unsustainable amounts of energy are being used in the craze to earn Bitcoin. It is sort of like the California Gold Rush of 1849; with people all over the world suffering from a modern-day version of gold fever, they justify the pillaging of the earth’s resources for the sake of the ever-increasing in value reward.
Blockchain Is Supposed to Be the Future
Among many of the things that upset me in contemporary society, there are two things that lead the pack. The first one is fake news, which is a form of propaganda; and, the second thing is income inequality — both of these also exacerbate the climate crisis.
The blockchain, in its most inspired-form, has the ability to both combat, and mitigate, the prevalence of both. The use cases for blockchain are limited only by the imagination of humans. In the most basic sense, the blockchain can create impregnable security for things like personal data, passwords, property deeds, medical records, etc. They can all be stored, and secured, in the blocks, or units of information, of the blockchain.
The blockchain has a revolutionary ability to overcome America’s crisis of value which grows America’s income inequality. A project I am currently working to launch in one America city, to then be used as cookie-cutter for other cities, called CityToken, helps impoverished cities create useable value for city residents. Simply put, when a resident does something that benefits the community, they earn.
These CityTokens, not mined using proof of work, reward the residents for being positively active in the community. So as to avoid contracts, and disputes about whether something was done or not, the resident completes an act, and it is then accepted by the person for whom the act was done. The exchange is then recorded on a blockchain; the agreed-upon amount of CityTokens are then transferred to the resident’s crypto wallet. This “new value” can then be used for buying things in the community. The resident can use earned CityTokens to pay for childcare at the community center, for example.
These kinds of uses for the blockchain are limitless, but they aren’t the potential Klondike of Bitcoin, and so too much of the world’s attention, both within the blockchain community, and in traditional finance, is focused on Bitcoin and Bitcoin-like returns. Empowering 50,000 Americans in some third-tier city is not of much interest to Big Finance, or Elon Musk, right? But it should be, in my view.
The blockchain can also be creatively used for rewarding people who make their lives more environmentally sustainable. The fads that come and go concerning reusable bottles and shopping bags, while well-intentioned, also blind people to the bigger picture. Climbing into an SUV to drive a quarter of a mile to the supermarket for a reusable bag full of groceries does not really help the cause. Walking the short-distance would be so much better, but many feel that they are just too busy to lose that precious time — which will likely be spent sitting on the couch, or before the computer using more energy.
Imagine if we could create a method using the blockchain for verification, whereby we earn value for walking to the store? We could then earn value for the reusable bottle, and the reusable shopping bag; we could earn value for the cold showers as opposed to the hot ones. The possibility to change behavior, to make life more sustainable, and at the same time chipping away at income inequality, is so vast thanks to the blockchain.
The life we know, with all of its unfairness, fake news, racism, voter-fraud frauds, cheating, destruction of the environment, even the truths behind the tax cuts for the super-rich which actually do more harm for the collective good than good, could all be become more balanced and fair (I can’t believe I am using the old Fox News tagline).
By moving away from the Bitcoin mentality, and to accepting ideas like, say my proposed CityToken — which is an “altcoin” — we not only make widespread use of the blockchain possible, we make it the recommended way for going into the future.
If you take one thing away from this article, let it be this. Every Bitcoin transaction needs to be verified by the entire Bitcoin blockchain. This verification process, because of the proof of work requirement, creates 300 kilograms of carbon! A transaction on blockchains using what are called “consensusless algorithms” generate just a few grams of carbon.
300 kilograms of garbage is polluting our earth for what? Can you name one good thing that has come from Bitcoin wealth? Elon Musk’s purchase of $1.5 billion worth of Bitcoin created nine million kilograms (19.8 million pounds) of carbon!
The promise in the blockchain is vast. I am not only an enthusiast but a warrior, and I will do all I can to help this very simple process by which truth is verified move along. Nevertheless, the self-importance of “Bitcoiners” is something that really puts me, as well as others I speak to within blockchain community, off. They claim it is the foundation for a society with government-less currencies, and this is accurate; but man’s greed, the very same greed that led us to Bitcoin to begin with, leaves us stuck in the realm of money for the sake of money, power, prestige, and the accumulation of goods which destroy our earth.
Nic Carter in Coindesk recently bragged about the amount of money being earned by Bitcoin miners each day:
“Today, bitcoin miners earn around $50 million/day, which annualizes to around $18.2 billion in miner revenue. Fully 85% of that revenue derives not from per-transaction fees, but from the issuance of new bitcoins” (The Frustrating Debate About Bitcoin Energy).
Honestly, I don’t care how much miners earn. He goes on to talk all about the potential benefits to society thanks to Bitcoin. I don’t agree. The benefits are coming to us from the blockchain, not Bitcoin. Bitcoin seems to be giving us many “potential benefits” because it is the target of so much miner, and consumer, attention. But it is not solving society’s problems; it is making a whole new array of them.
“Gold Sickness, also called Dragon Sickness or Gold Fever, is an apparent mental change that happens to some characters in The Hobbit. It is caused by large amounts of treasure, particularly treasure hoarded by dragons.” (Gold Fever).
It’s time to rethink this obsession.