It was supposed to be a financial revolution. Instead, crypto has become an environmentally disastrous gift to con artists, says academic David A Banks
it is influenced by the amount of investment put into it
All currencies have this problem. Bigger ones suffer less from it, so you might not notice it. In fact it’s even worse than you say.
Whales actively manipulate the price for profit. It’s not a ponzi scheme. You’re confusing two different things. If you want a buzzword it’s a pump and dump.
This doesn’t affect only currencies but any commodity. Look at oil or food or land or gold. All have exactly the same problem you cite for bitcoin. In fact gold is a very good analogy for bitcoin. You can understand it better by thinking of it as “digital gold”.
We don’t need to get into the environmental aspects
Thanks. That’s a tired auld one.
your biggest stake holders now are the incredibly wealthy
I’ve thought about this a bit. Right now, I don’t think the currency itself can or should solve this. The only working solution is redistributing wealth through the tax system. It works very well when done properly. So profits from bitcoin should be taxed like any currency trade. Income in bitcoin should be normally. Inheritance tax, and all the rest, should all be agnostic to which currency you use. This is the only proven way.
If there’s a crypto out there that isn’t available for fiat investment
That’s a very good idea. How would it work? Have you seen been anything written about this already?
It’s not a Ponzi exactly, it’s called a pump-and-dump. But yes it’s very common and very bad.
I agree that crypto currencies seem to be used much more for cynical investment profiteering, and much less for commerce, that fiat currencies. Probably because they are new. Investors are much faster at exploiting any new thing.
Bitcoin has not failed yet. It might become like company shares, an ostensibly useful thing that in practice is just a money-making game for professional gamblers. Or it might find a real large-scale use in the economy. It depends on so many factors.
The environmental issue really deserves its own discussion. There are several valid ways of looking at it. For example:
Bitcoin’s model was simple and robust and successful. But bitcoin’s value increased too much, too fast, making mining very profitable. It’s a victim of its own success.
It’s easily fixed, for example by borrowing Monero’s proof-of-work algorithm. But the bitcoin devs need to be given an incentive to change it.
This is capitalism - everything gets exploited for profit until it is devastated. It’s not a bitcoin issue it’s sick-society issue.
I personally believe that the GPU and electricity crises are being driven by datacentres (collecting human behaviour data) and AI (finding ways to exploit that data for profit and power) but bitcoin is being used as a scapegoat.
And anyway the solution is not just “ban the bad things”. There are effective ways to disincentivise people from exploiting electricity.
All currencies have this problem. Bigger ones suffer less from it, so you might not notice it. In fact it’s even worse than you say.
Thanks. That’s a tired auld one.
I’ve thought about this a bit. Right now, I don’t think the currency itself can or should solve this. The only working solution is redistributing wealth through the tax system. It works very well when done properly. So profits from bitcoin should be taxed like any currency trade. Income in bitcoin should be normally. Inheritance tax, and all the rest, should all be agnostic to which currency you use. This is the only proven way.
That’s a very good idea. How would it work? Have you seen been anything written about this already?
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It’s not a Ponzi exactly, it’s called a pump-and-dump. But yes it’s very common and very bad.
I agree that crypto currencies seem to be used much more for cynical investment profiteering, and much less for commerce, that fiat currencies. Probably because they are new. Investors are much faster at exploiting any new thing.
Bitcoin has not failed yet. It might become like company shares, an ostensibly useful thing that in practice is just a money-making game for professional gamblers. Or it might find a real large-scale use in the economy. It depends on so many factors.
The environmental issue really deserves its own discussion. There are several valid ways of looking at it. For example:
Bitcoin’s model was simple and robust and successful. But bitcoin’s value increased too much, too fast, making mining very profitable. It’s a victim of its own success.
It’s easily fixed, for example by borrowing Monero’s proof-of-work algorithm. But the bitcoin devs need to be given an incentive to change it.
This is capitalism - everything gets exploited for profit until it is devastated. It’s not a bitcoin issue it’s sick-society issue.
I personally believe that the GPU and electricity crises are being driven by datacentres (collecting human behaviour data) and AI (finding ways to exploit that data for profit and power) but bitcoin is being used as a scapegoat.
And anyway the solution is not just “ban the bad things”. There are effective ways to disincentivise people from exploiting electricity.