Introduction
Many people are enthusiastic about cryptocurrencies such as Bitcoin, but others point out a significant flaw described as cryptocurrency mining, which requires considerable energy. Although mining is merely one method of authenticating cryptocurrency transactions and minting new coins, it is employed by Bitcoin and Ethereum, the two most prominent cryptocurrencies. Schinckus’s (2021) research study showed that 2 out of every 5 mining sites for high-energy Cryptocurrency were environmentally degraded due to the mining procedures. This paper aims to identify and evaluate some of the potential benefits of Cryptocurrency in the current generation and the impacts it has on the environment. Although the world is transforming and Cryptocurrency is commonly becoming accepted, there have been severe ecological impacts on the climate through degradation.
How Cryptocurrency works
In explaining how Cryptocurrency works, it’s worth noting that cryptocurrencies run on the Blockchain. This widely distributed public ledger keeps track of all transactions and allows investors to see and keep track of them. Users can repurchase funds from customers, which they can then store and utilize in their encrypted wallets (Köhler & Pizzol, 2019). Cryptocurrency is power-allocated digital money safeguarded by encryption and is based on blockchain technology. To comprehend Bitcoin, it is necessary first to understand three terms: Blockchain, decentralization, and cryptography. In the context of cryptocurrencies, a blockchain is a digital book whose access is still dispersed among authorized users. These are records of property transactions, such as money, a house, or intellectual property (Badea & Mungiu-Pupӑzan, 2021). The users share access, and any shared information is transparent, quick, and “consistent.” Any blockchain entries that exist correctly and will not be repaired or compromised – even by the administrator – are said to be fixed. The common currency we use, regulated by institutions like the State Bank of India, is one store (DuPont, 2018). Since there is a division in Cryptocurrency, no single authority can be held responsible for a crypto currency’s rise and fall. This has several advantages over standard money.
Blockchain technology keeps track of activity resistance and who owns what underpins Bitcoin and any other cryptocurrency sets. The development of Blockchain has been hampered by a problem that has plagued past attempts to create digital money: preventing people from duplicating their objects and attempting to use them twice (DuPont, 2018).most of Cryptocurrency is used in the exchange of products and services, while others are used to assist in operating computer networks that execute sophisticated financial activities (Köhler & Pizzol, 2019). Bitcoin’s mining method is one of the most frequent ways to create bitcoin. Mining is a costly process in which computers solve complex issues to secure the integrity of network operations. Owners of such computers will receive a freshly designed coin as a prize (Mohsin, 2021). Some cryptocurrencies manufacture and distribute tokens in various ways, and many have a slight environmental impact.
Blockchain technology is already used in banks, insurance companies, and other industries. The cryptocurrency market is predicted to increase at a 12.8 per cent annual pace from 2021 to $ 4.94 billion by 2030, owing to the need to improve the efficiency of current payment systems, global inflation, and the growing need to protect data (Köhler & Pizzol, 2019). Many cryptocurrencies are built on blockchain technology, a network protocol that allows computers to collaborate to keep a shared, verifiable record. The blockchain network’s problem is to ensure that all participants agree on a correct copy of the historical record. It can be difficult for customers to trust that their items are safe if there isn’t a well-known means of guaranteeing transactions (Schinckus, 2021). On a blockchain network, there are various ways to establish an “agreement,” but the two most prevalent are “proof of operation” and “proof of stack.”
Stakeholders of Cryptocurrency with their benefits and risks
Like any other innovative business idea, Cryptocurrency has stakeholders heavily involved in the business idea. Traders, developers, business industries, and miners are the major stakeholders in this business (Lee et al., 2021). For the practical realization of the commitment of this purpose, the stakeholders have to be in proper coordination between the three stakeholders for the business to run its idea successfully. There are three stakeholders in the industry: stakeholders from the protocol layer, including the researchers and academia (Lee et al., 2021). Secondly, there is a group with stakeholders from the networking layer, including traders, miners, and industry bodies. The last group of stakeholders in the cryptocurrency business is those stakeholders from the application layer. These stakeholders include entrepreneurs, end-users, corporations, and venture capitalists or investors (your Rehman et al., 2019). They are the natural face in the cryptocurrency business’s actualization and market to consumers and various customers.
Among the three levels of stakeholders, it should be noted that some must benefit more than others based on the business output and level of outsourcing income. Depending on the business setup, there is a balance between who benefits most and who helps least. However, the more prominent beneficiaries are those stakeholders from the protocol layer (Lee et al., 2021). They are believed to be at the bottom pyramid of production, and most of the output at this stage does not involve a lot of mechanizations and exploiting a lot of resources. There is little risk involvement since it is not the solid phase in the production. However, returns also have a challenge since they base their benefits on payments (ur Rehman et al., 2019). Contrary, regardless of the third level of stakeholders investing a lot of resources in the business, they seemingly have better returns in the end.
Potential benefits of cryptocurrency technology in the future and currently
Although there are possible benefits to bitcoin trading, as previously stated, there are numerous prospects that bring a belief that this kind of technological trading advancement has a great future and will be critical in the future. One of the most appealing features of cryptocurrencies is that it is fully decentralized, with no central bank or government to regulate their value. Its significance is unaffected by national political will or financial policies because it is dispersed between countries (Bunjaku et al., 2017). While this implies that Cryptocurrency is unregulated, it does have a few advantages that distinguish it. For starters, it’s a means to avoid paying taxes. You must pay interest on the value of your property in the United States, for example. Second, bitcoin has the advantage of allowing you to buy and sell goods and services without dealing with the typical individual. As a result, the internet world is like the Wild West, with no banks, governments, or marshals to control the market.
Furthermore, cryptocurrencies are categorized, implying that a central authority does not control money. As a result, you can buy and sell it (Berentsen & Schär, 2018). The only way to tell if you’ve made a cryptocurrency investment is to look up the company and its name.
Current and future drawbacks of the cryptocurrency technology
The major drawback of Cryptocurrency is that there are currently over 10,000 hidden currencies on the market, each with its own set of issues. However, all cryptocurrencies have a few characteristics in common, including a penchant for abrupt increases (and decreases) in value. The supply of coins from miners and the demand for them by consumers drive prices. And these shifts in supply-demand can result in large profits (DuPont, 2018). The second risk is that blockchain technology is inherently safe when used in conjunction with cryptocurrencies. Some of the most significant advantages of cryptocurrencies are not related to the assets themselves but the infrastructure that supports them. That is a promising blockchain database that keeps track of everything that happens on it. It will never be removed after it has been logged into the Blockchain (Badea & Mungiu-Pupӑzan, 2021). Since the Blockchain is kept profitably on numerous computers, no single criminal can have access to the entire chain simultaneously; any information saved on it is safe.
Conclusion
With many stakes existing, it is evident that there has been a lot of transformation as a result of cryptocurrency technology and innovation; there is also a lot of concern for the environment through the carbon released. Calculating a cryptocurrency’s carbon footprint is a difficult task. Even though fossil fuels constitute a crucial energy source in many cryptocurrency mining countries, miners should seek out less expensive energy sources to remain profitable. In many circumstances, this means relying on alternative energy investments, as data reveals that Cryptocurrency investing is extremely dangerous and speculative.
References
Lee, M., Frank, L., & IJsselsteijn, W. (2021). Brokerbot: A cryptocurrency chatbot in the social-technical gap of trust. Computer Supported Cooperative Work (CSCW), 30(1), 79-117.
ur Rehman, M. H., Salah, K., Damiani, E., & Svetinovic, D. (2019). Trust in the blockchain cryptocurrency ecosystem. IEEE Transactions on Engineering Management, 67(4), 1196-1212.
Berentsen, A., & Schär, F. (2018). The case for central bank electronic money and the non-case for central bank cryptocurrencies.
Bunjaku, F., Gjorgieva-Trajkovska, O., & Miteva-Kacarski, E. (2017). Cryptocurrencies–advantages and disadvantages. Journal of Economics, 2(1), 31-39.
Schinckus, C. (2021). Proof-of-work based blockchain technology and Anthropocene: An undermined situation?. Renewable and Sustainable Energy Reviews, 152, 111682.
Köhler, S., & Pizzol, M. (2019). Life cycle assessment of bitcoin mining. Environmental science & technology, 53(23), 13598-13606.
DuPont, Q. (2018). Social and technical opportunities and risks of cryptocurrencies and blockchains. Committee on Science, Technology, and Law, National Academies of Sciences, Engineering, and Medicine on October 9.
Mohsin, K. (2021). Cryptocurrency & Its Impact on Environment. Available at SSRN 3846774.
Badea, L., & Mungiu-Pupӑzan, M. C. (2021). The economic and environmental impact of bitcoin. IEEE Access, 9, 48091-48104.
write