With more and more people investing in cryptocurrencies, we look at how it could impact our world both online and in reality.
The gold rush is well on its way, especially since 2015, and gathers momentum with each passing month. Yes, we are talking about cryptocurrencies.
There are those who buy cryptocurrencies at the exchanges after paying the market price at the time of the purchase and then there are those who mine it.
Specifically referring to Bitcoin, the price ranged from a couple of hundred dollars in 2014 to under 1,500 dollars until the beginning of 2017 after which there was a steady and steep upward climb with the price crossing 60,000 dollars against all expectations this year, before the correction began.
This correction is to an extent, yes to an extent only, caused by the news around the globe about the impact of mining Bitcoins, to the environment.
Mining Bitcoins is no longer about a stray geek sitting in his lonely room and working on his computer.
Organisations have set up what are called mining farms which are large offices with dozens to hundreds of individuals who are dedicated to mining Bitcoin or more cryptocurrencies.
And They Call It A Mine?
So what are these miners? These are experts in the field who verify Bitcoin transactions which are called blocks.
Once they have established the transaction and have made sure the same coin has not been spent more than once they get a reward in Bitcoin. This is the way new Bitcoins come into circulation.
The public ledger of the currency remains decentralised. This means the currency is not controlled by any single organisation.
It gets constantly updated by, no one knows how many computers around the world that are operated by miners.
The initial supply of Bitcoin was just a little over 1.6 million. As of 2020 there were over 18 million Bitcoins in circulation. The founder worked it out so that a total limit of 21 million Bitcoins can be reached.
What will happen to the price once this limit is attained is anybody’s guess. Even at present the sums are staggering.
Climate Change and Cryptocurrencies
In recent weeks, news erupted globally about the unacceptable impact of Bitcoin mining on the environment.
Some have said it consumes as much energy as Argentina and others have compared it to the energy consumption of other nations such as the Netherlands, Sweden, Ukraine and so on. Is this all blah?
Doesn’t look that way given that the International Energy Agency has come up with exact numbers which work out to 113 TWh per year.
So what happens hereon? Organisations have already announced that they are putting up solar powered plants especially for the mining of Bitcoins and other cryptocurrencies.
Quite evidently digital currencies are going to move from strength to strength. Many banks have announced the development of their own digital currencies and so have governments.
As we speak there are more than 4,000 cryptocurrencies in existence. Most of these do not have much or any following.
On the other hand there are some including Ethereum and XRP Ripple that enjoy quite a vast number of ‘devotees’.
As of today XRP is largely decentralised and is declared to be faster and more reliable than its competitors, consuming negligible amounts of energy compared with Bitcoin and others.
If this is true, in-as-much as is its popularity among the younger generation, many experts assert the price will spike enormously once the company reaches a settlement with SEC or wins the litigation that’s been brought on by SEC.
Not all cryptocurrencies have an environmental impact as Bitcoin does since they are not mined.
At the same time, even those currencies that consume huge amounts of energy continue to have a massive following since the sums involved are humongous.
Thus environmental impact or not, cryptocurrencies are not just going to die out. In fact, the fun is only beginning according to most experts.
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