Bitcoin is the new Godwin’s law: it’s a topic that arises out of nowhere and that very few people really understand, but it comes up as the conversation grows longer. In addition to generating a roller coaster ride for speculators (1 bitcoin was worth up to $10,000 before promptly plunging in value) numerous scientists have suggested that it causes massive pollution… And since it’s here to stay, we have to find a way to deal with it, but differently.
Back Market will sort fact from fiction for you.
A Beginner’s Guide to Bitcoin
Here’s a quick guide just in case, even after all the explanations from your brother-in-law and Bill at the coffee machine, you still don’t understand what a Bitcoin is.
It is a cryptocurrency (note: in the future, use « crypto » randomly in front of adjectives and you’ll have a 65% chance of passing for a super-informed journalist from a well-known publication like The Verge). In other words, Bitcoin is a virtual currency, whose main advantage is that it is considered to be independent and incorruptible.
Bitcoin first appeared as the Blockchain (another word that will make you sound smart), which is based on the principle of pooling the computing power of personal computers. This is for the purpose of verifying the data of a currency transaction and recording the information in a virtual secure ledger.
Imagine, if you will, a ledger kept by a deaf, mute and blind scribe writing with a permanent marker. You can already see how difficult this job would be…..
Why does it cause massive pollution if it’s virtual?
It may be difficult to conceptualize, but something that is virtual always has a physical aspect to it. The hours spent when you play Candy Crush or when little Victor does Google searches for his science project, or even while binge-watching Netflix, rely on numerous cables, servers and factories throughout the world.
In addition to requiring physical space, these technologies also use an astronomical amount electrical power. Remember when we first began to use Google and to overload inefficient servers? Well, certain studies show that the Bitcoin network uses 100 times more electrical power than Google servers. That’s the energy consumption of a country like Ireland, with sheep, kilts, leprechauns and ghosts included.
The computing requirements of the Bitcoin network are phenomenal because of its validation system. Although it was originally designed for the personal computer, the availability of computing power has clearly become a business (billable under “management costs”). This has led to the creation of “mining farms », particularly in China where electricity is essentially generated from coal-fired power plants and other inefficient and outdated systems which produce an excessive amount of greenhouse gas emissions.
What are the short-term solutions?
Two valid options have recently been presented:
– Meet the need in a different manner: mining farms that are powered by green energy. This is the case in Austria for example, with Hydrominer, which uses hydroelectric power. An added bonus: this electricity is less expensive and therefore more competitive.
– Modify the need: Bitcoin is a « Proof of Work » system which requires a considerable computing volume to validate the transaction. Changing to a “Proof of Stake” system would drastically reduce this computing volume by pre-validating major stakeholders who already have a Bitcoin wallet
So, how long till we get that green seal?