Bitcoins- the energy cost of Digital currency
It has been discussed in the news that a single transaction of Bitcoins could use the same amount of power a home would use in a month. So whilst the value of this online currency explodes, we look to see what are the pros and cons.
Bitcoins differ from other currencies as they are not tied to banks, therefore cost less to transfer or pay for internationally. In addition, they allow for anonymous purchases and present no fees at making payments. You can transfer Bitcoins digitally, making it similar to transferring money from a bank.
These benefits show that there is reason for the new currencies popularity, but there are some downsides. Transfers of bitcoin demand a lot of power. This is due to the process used to see verify payments, and ensure they are legitimate. Making this process costly deters individuals from making fake payments, whilst ensuring security for others. Additionally, Bitcoins and the digital ‘wallet’ they are stored in does not receive the same level of insurance as actual bank accounts, meaning money can be hacked and lost forever.
With Government’s lacking control over the currency, and the way it provides almost total anonymity, Bitcoins can be both useful and potentially dangerous. The unregulated nature of Bitcoins is attracting attention, and therefore demand for the currency. This could allow for a cheaper way for businesses to buy and sell products, and not have to rely on banks.
In energy terms, the costs are expensive. Growing demand means increasing amounts of energy are used. The popularity of Bitcoins in the US could present issues as the environmental policy has recently changed, meaning the deregulated nature of Bitcoins and the blasé attitude of the USA towards environmental policy could lead to issues further down the line.