Welcome back to our series on everything bitcoin! This is the third and final post in a three-part series about bitcoin, covering the good, the bad, and the ugly. In this piece, we’ll look at the worst aspects of bitcoin. Want a more positive take? Check out our piece on bitcoin’s pros (here). Want some more negative but slightly less damning takes? Check out our post on the merely bad.
Bitcoin has created entire new economies and extended financial opportunities to disenfranchised populations across the world. The fact remains that there are some very serious drawbacks that are giving even the strongest proponents of the digital currency some pause. What are they?
Crime and risk
Contrary to popular belief, the proportion of Bitcoin transactions connected to illegal activity is relatively small. That’s not to say that Bitcoin users aren’t at risk. An entire industry has sprung up around relieving unsuspecting people of their bitcoins. There’s bitcoin stealing malware, phishing scams, Twitter scams, investment scams, spear phishing, malicious copies of wallet software, malicious copies of wallet hardware, and phishing. If there’s a way to steal bitcoins, someone has thought it up and implemented it in a very clever way. Users are faced with an enormous responsibility of keeping their coins safe.
There’s no real way around it: Bitcoin mining is a significant source of carbon emissions. The Cambridge Bitcoin Electricity Consumption Index states that Bitcoin accounts for 0.31% of the world’s energy consumption, using approximately 67.72 Terawatt hours. Put into context, that’s more than the entire country of Austria. Researchers writing in the journal Climate Risk Management argued that the impact of the Bitcoin network on the environment warranted the imposition of a carbon tax.
Even though bitcoin mining’s climate impact has lessened, it’s still ot in the clear. After Beijing put a stop to bitcoin mining, the hashrate (collective computing power of bitcoin miners) dropped by more than 50%. Even so, mining is a profitable activity and entrepreneurs are likely to move into the market opening and pick up the slack. Many of them will flock to places with cheap electricity generated by non-renewable energy sources like gas and coal.
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See you next time!