Environmental impact of cryptocurrencies.

Critics state that Bitcoin mining, being an energy hog, is a terrible thing to the global economy, because electricity is a vital resource that could be used for a better end… and because carbon emissions are not ethical, as they change the Earth’s climate unfavourably.

But let’s not forget the fundamentals of economics. Such a high energy consumption is only possible because of speculative value of cryptocurrencies. It’s value is derived from their superiority to traditional money and banking system:

  1. Political independence, payment channels which cannot be blocked by government, which promotes economic freedom and has potential to starve crony capitalism.
  2. Convenience, no need to transport money physically with use of heavily armored vehicles… no need to go to ATM to get cash. No advertising from Bank.
  3. No need for brick-and-mortar banks, no need to hire bank clerks, which is a waste human capital.
  4. Promotion of saving over spending. Potential ability to stop inflation, which in turn forces people to invest more into real estate, which costs much energy to build and maintain.
  5. Cost saving, because money can be cheaply sent worldwide. Of course Bitcoin network is a bit expensive now, but there are many alternatives to Bitcoin (such as Bitcoin Cash, Ethereum, Dash, Litecoin) with superior characteristics in terms of transaction cost… and potential to scale massively with no greater energy cost.
  6. Increased competition and access to global markets. Creative freelancers from around the world could now work for everybody in the global economy, just by using a computer. Private payment option allows an unprecedented freedom.

There are some drawbacks of course, which socialists and democrats like to point. Firstly, financial freedom allows people to freely support terrorist groups. But should that be the domain of blocking? In my opinion no… governments should rather inoculate people to dangerous ideas, educate, promote productivity and track actual bandits, than try to starve them financially. A criminal should be certain that he will get prosecuted in 100% of cases (because of cameras etc.) not blocked from having a gun and money.

Some say that trade sanctions are needed to promote a fair world, where rouge states don’t get to trade with the “noble” West, such as EU or NATO. But is that really an average Russian’s fault, that he or she lives under an authoritary government? Is this an African’s fault? No… rather I feel these people will behave nicer if allowed to trade and earn money by selling services to us. Starving people only promotes passivity and allows wrong systems to persist.

Then there’s a question of the environment. Firstly, the States that want to shut down cryptocurrencies have invested heavily in coal-powered generation themselves. They have subsidised energy, to let people run various industries, and then… if energy goes to Bitcoin they are upset about it’s environmental impact. Seriously? Better think of ways to account for CO2 and pollutants from the energy you produce. Higher energy price, ability to trade it freely, and demand from crypto miners can only help promote building of PV, wind and water-based generators. Energy market is not innovative partly because of administrative overhead of trading energy. Not because of lack of technical means of generating and storing them…

Energy will be even more sustainable, if you allow people to trade it between neighbors. Right now you cannot just sell electric current to a neighbor, or to a local factory. You need to sell it to a monopoly first.

And finally, energy usage will have to be more in proportion to transaction volume if cryptocurrency inflation decreases with time. Bitcoin has a cap o 21 million units, and there will be never more Bitcoins than that. Now it’s energy use is high due to the simple formula:

MINING REWARDS = VALUE * (INFLATION + TRANSACTION FEES)

But as soon as inflation decreases and only transaction fees drive miner’s rewards, energy cost will have to be in proportion to it.

But you ask, how about energy poverty? How about people that cannot afford some electricity? Well… they do have to pay for monopolies currently anyway. And they do pay consumption taxes even for goods that don’t have many adverse environmental effects. And they do pay for bank fees, if they have an account.

And they cannot just produce goods and services for a populace. I would like to have my relatively poor neighbor to cook some food for me. Or to sell me wine, beer and other drugs. Or even go to the local wholesale grocery market, and sell some fruit/vegetables on the street as they used to do in the good old times. But now they cannot. You can park hundreds of idle cars in the street, but if you try to sell something from a van without a license – you will get a fine. Especially if you don’t want to pay taxes for that sale.

They get a welfare benefit if they are really poor, but as soon as they earn some money, they not only must legally stop getting benefits, they will get taxed. Especially if they try to work as an independent business, they will have to pay relatively high social security contribution, regardless of the profit they have. Despite theoretically progressive tax system.

What a sad world, which fights merit and production, but promotes cronyism, idleness and inflation.

Small investments – in defense of capitalism.

The critics of capitalism rightly state that 1% of the population has most of the world’s wealth, and that owners of capital have monetary power to employ the working class, and then take away most fruits of their labor… cause the poor people are powerless to do anything other than work for the capitalists.

But hey, is that really the case? I think not, and the poor do have the power to change their lives… if they accept that wealthy people are wealthy for a reason.

Of course some rich people are cronies, that live of government’s support and externalize costs of their businesses to the society. But as the economy gets more sophisticated, it doesn’t neccessarily need to rely on one branch… and some of the seemingly monopolistic branches are fed by customers.

  1. Spend less than you make. That’s the crucial rule, that will allow you to put aside some money. It will also decrease the capitalist’s power, if you are able to avoid the charm of mass-advertising, and lets you choose what you will build with your money later. But in itself it is not sufficient.
  2. Work smarter, find ways to leverage your work, maximise it’s output and utilize it more than once. It starts with as simple steps as reading some books to specialize in one’s work and being better than that, to changing the employer once you gain practice if the existing one treats you poorly. Try placing yourself in the position of manager (if there’s a clear path of advance in your company and you trust it), or do something entirely different.
  3. Cut back on costly habits. A beer a day, which millions of average people drink, doesn’t seem like much, but it will decimate your already small savings. The same applies to smoking, going to clubs etc. Go work out and read a book instead.
  4. Cut back on TV, Facebook, blogs, YouTube and even Wikipedia. Choose quality content.
    While being informed and stimulated seems like a good idea, and is educational in general, it places you in the position of consumer of culture. And while you consume, you cannot produce. Meanwhile some wealthy people concentrate on producing more wealth.
  5. Live as efficiently as possible. Sacrifice bits of comfort.
    Not many poor people seem to care about the small savings or investments like energy efficient appliances. If the price of LED light bulb still turns you off, think about all the carbon emissions it will save, and the corresponding energy bill. If public transport fees or car costs bring you down, consider if you could live happily in a more cosy apartment, closer to the city center. It might seem costly to buy square meters at exorbitant price, but if you think you see some value in the city you live in, many people of your nationality will see it in the future.
    Maybe you’ll own a very, very small flat instead of a bigger one but hey, do you really want to pay mortgage, and heating, and tax, and transportation costs for something that large? Driving to and from work will take away at least an hour of your day so… it’s not worth it, however little you earn you’ll have less time for productive activities.
  6. Go beyond that, think like an entrepreneur.
    For sure you know something that could make your life, and the lives of people around you easier. Maybe it’s a service that you would happily use, and you know how to provide. Or a good which you would buy. Or some absurdity in the world, which could be fixed if a business got started, or if people used a product that doesn’t even exist.
    Than think again, and if it’s something that is legal, safe and you could do it… why don’t you give it a shot?
  7. Invest smart.
    There were many entities that change the world around us, from the established businesses (shops, cafes, barbers, hairdresses, florists, construction companies, mechanics workshops) to the technological disruptors (such as Uber, the Internet, cryptocurrencies etc.). Beware of tricksters and manipulators which promise you easy money in the things you don’t understand… but if you do understand some issues and therefore you think you are able to predict the future needs of the people, why not giving a business or investing a try?
  8. DON’T GIVE UP
    OK, some things that you will do will seem crazy and meaningless. Your friends and family might not believe in you, cause you might have some failed experiences. Maybe it’s not a perfect moment to dump your stable job but… if you feel that you can do something better than you did before, then do it! And please, be obsessed about reading and educating yourself in the right direction. It will pay sooner or later.