Past decade has seen extensive increase in the field and usage of digital currencies. Not only that, a large number of business firms both operating online and offline accept the digital currency as a method of payment. Apart from this, some of the prominent key players have acquired dominance in the market operations., one being- bitcoin- the market capitalization of which stands at $421.35 billion in 2023. Other major players include Ripple, Litecoin, Ethereum that has a market capitalization of over $100 billion.
The demand has been driven up partly because of its recognition as a store of value and a means of payment, the extending ease of buying and using digital currencies. In view of the fintech solutions that have transformed the banking industry as it encompasses the use of decentralised systems and blockchain technology, the faster and efficient transactions have highly caught the attention of the masses. Owing to its decentralised nature which reflects that idea that no single entity controls the currency, it’s open to rigid security as there is no central point of failure- it’s recorded on public ledger which is simply secure and transparent. Additionally, due to the absence of intermediaries such as banks which include services of currency exchange and wire transfers, it makes the production and distribution less complicated and simple. However, having its arrangement like a shared metafiction, it’s skeptical and a factor that’s killing the planet vulnerably.
The currency devastates not only the plant but also the communities which thrive near the mining farms due to the sole reason that they run on fossil fuels. Bitcoin consumed nearly 36 billion kilowatt-hours in the year 2022, threatening the undermined decades of progress towards achieving climate goals and reducing pollution in large. Through their so-called “efficient mining practices” they have been reported to raise the cost and risk for utilities and their ratepayers, stress the electric grids and flooding the communities with noise. The bitcoin to human energy consumption is unwaveringly high.
Henceforth ignoring the investment in long-term energy infrastructure that benefits the grid, what cryptocurrency seeks for is the fastest energy that can only serve its needs and looks for minimal regulation. Without any action taken to limit the cryptocurrency mining, the goals set by the Paris Agreement and Intergovernmental Panel on climate change to restrict warming to two degree celsius. Apart from the environmental concerns, cryptocurrencies due to its volatile nature and decentralised governance lack trust in its operation. The pseudonymity has allowed it to become associated widely with criminal activities involving funding of terrorism, mafias and wars. No regulation would also comply with no course of protection. The complexity of the currency involves a multidisciplinary debate. No matter what side an individual dwells on, the ultimate purpose of money is to serve as a tool that people can acquire -via trade- the goods necessary for development, aiding economic growth and development, and working towards the common good of the society in large.
The writer is a Class 12 (Science) at Mayo College Girls’ School, Ajmer. Her interests lie widely in finance and management. Views expressed are personal.
