Cryptocurrency is a technology that has experienced an upward trend due to the popularity of tokens such as monkeys with different features and play-to-earn games. While several crypto investors have promoted this technology as another alternative to earn money during the online setup, there are still issues surrounding the technology, prompting crypto operations to receive backlash regarding its impact on the environment and economy.
Pixel economy
Cryptocurrency is a form of currency that exists digitally, using a decentralized system for transactions. While this form of technology has existed for more than two decades, it only gained popularity during the early years of the pandemic. Non-fungible tokens (NFTs), on the other hand, are digital assets that maintain the digital ledger of their owners. These digital currencies bridge the gap between finance and technology by providing an avenue for expedient investments that are accessible even to small-time investors.
Bitcoin, Ethereum, and Tether prevail as some of the dominant currencies in the market, with Bitcoin’s market cap rising to USD808 billion since its debut in 2009. As of March 2022, more than 18,000 cryptocurrencies are currently in existence worldwide.
The trend became a center of interest to several Lasallians who are looking for alternative ways to invest their money. They were usually introduced by friends or relatives who were already participating in the crypto market or shifting their focus from the stock market to the crypto market.
Miguel Cuneta, co-founder of Satoshi Citadel Industries, explains that NFT appeals to many as it is an easy way to get into cryptocurrency. “People see an opportunity to make money [through NFTs] even though they have little capital because there’s no barrier to entry,” he states.
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As cryptocurrency continues to make waves across the world, experts highlight its extensive impacts on the economy. Its rapid growth as one of the most desirable investments today can be attributed to its convenience, especially given its capacity for direct digital transactions with relatively low transfer fees. Moreover, it provides entrepreneurs with a platform to expand to more lucrative international markets.
Cuneta discusses the rising demand for digital commerce and transactions in the Philippines, “[The pandemic] accelerated people’s trust and people’s demand [for online transactions].”
It has also contributed to transforming economic structures by shifting greater financial power and independence to individual investors instead of institutions such as banks and governments.
“It’s one of the few technologies of this century that you can truly [say] is revolutionary. A decentralized network of keeping track of people’s finances is more appealing than being at the mercy of a centralized authority such as a bank,” states Stephen* (IV, CS-ST).
Cuneta expounds that the “permissionless” nature of cryptocurrency is one of the driving forces behind its popularity, “All those barriers, all those permissions that the existing financial systems [have] created over the last few decades were removed by Bitcoin.”
Moreover, he also explains that it is especially well-received by younger people, “It’s [like being] against the establishment. It’s like you’re outside the system and a lot of young people feel like that.” He further expounds, “Cryptocurrencies represent an opportunity for many young people to be able to participate in [investments].”
Romrik Flores (I, LGL), meanwhile, proposes that blockchain is the most significant technological invention since the internet, especially with the emergence of web 3.0 and the transition into the “metaverse”. “I believe blockchain is our future,” he asserts.
“NFTs now have a lot of utility which was not that possible beforehand, and everyday, people come up with new and innovative ways to integrate current technology with NFTs,” David* (IV, IET-AD ) further suggests. “Time will come [when] NFTs and crypto will create new technology which will greatly increase its value and popularity.”
However, cryptocurrency also poses some disadvantages. Numerous currencies lack sufficient security policies for their buyers, leading to scams. In 2021 alone, there were nearly 100,000 reports of cryptocurrency-related scams [where], with 64 percent of the cases involving fraudulent payments. Other common frauds include Ponzi schemes, an investment scam that allows earlier investors to profit from recent investors; bogus websites; and endorsements from con artists.
In addition, cryptocurrency is known for its volatile nature due to being entirely governed by the law of supply and demand, which can result in both big gains and big losses. Aside from still being a developing system, its volatility is also influenced by its lack of a regulatory body. For many investors, it is as likely to lose as to gain while investing.
“If you are to invest in NFTs, consider both the benefits and risks of it. As a responsible investor, you should consider your investment’s economic and environmental repercussions while earning profit in the process,” Flores advises.
Princess Edlyn Luciapao (I, LGL) further stresses the importance of research before investing in cryptocurrency, “Invest in knowledge first.”
Beyond the screens
Cryptocurrency has also proven to have extensive detrimental impacts on the environment, which are now further highlighted due to the recent widespread social media movement on environmental welfare following the Scientist Rebellion’s worldwide climate change protests in April 2022.
A key issue on the topic is its escalating carbon footprint due to the consumption of large amounts of energy by the high-powered computers that facilitate its transactions. The faster the demand for cryptocurrencies grows, and the more people continue to invest in them, the greater the necessity to consume fossil fuels and other sources of energy to accommodate the demand. Bitcoin mining alone generates approximately 22 to 22.9 million metric tons of carbon dioxide and 37 kilotons of electronic waste per year, further worsening climate change and environmental damage.
“NFTs are indeed bad for the environment, but many are still into it because of the potential earnings,” Luciapao admits.
“Cryptocurrencies and NFTs are both terrible for the environment,” agrees Flores. “While one might argue that they are slowly transitioning to green energy, we need to acknowledge that green energy is insufficient to meet the global energy demand even before crypto became mainstream.”
However, David argues that while it is currently harmful to the environment, developments are being made to remedy these negative impacts, “I can agree the NFTs are currently harmful, but only the NFTs within the Ethereum blockchain because of the massive amounts of electricity it needs to process transactions.” He also claims that a new update to the blockchain will “nullify this, and the environmental impact of ETH NFTs will be very, very low.”
As cryptocurrency continues to transform the global economy and attract more investors, there is still much left to be explored about its security, societal and environmental impacts, and potential for improvement.
