The Rise of Digital Currencies: What It Means for Traditional Banking
The Rise of Digital Currencies: What It Means for Traditional Banking
Digital currencies are fundamentally changing the way we think about money and banking. The rapid rise of cryptocurrencies like Bitcoin, along with the
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Cryptocurrencies: higher transaction fees, slower transaction times, and zero consumer protections compared to just using a credit card.
On the other hand, crypto is also terrible for the environment.
That depends entirely on the currency.
Ethereum l2 has way lower (less than a tenth) transaction fees than credit cards and barely has an impact at all on the environment because there is no mining.
And cryptocurrencies do have consumer protection services but no one ever uses them.
More importantly, however, Visa and mastercard collude and boycott japanese anime and manga websites because they think anime and manga promote gender stereotypes, so credit cards can fuck right off.
Credit card fees can actually get quite large as well, they're just hidden from the consumer, and we all pay a higher price because of it.
E.g stripe is 2.9% + $0.30
Even BTC with its current high (not peak high fees) fees is cheaper than CC's when you start getting into a few hundred dollars purchase.
And many cryptocurrencies have much lower fees. For example, Monero fees tend to be <$0.01, though they can be as high as $1, which is way lower than Bitcoin. Here's a source for Monero transaction fees. And that absolutely tracks for Monero since it's entire purpose is to replicate cash transactions as much as possible.
Don't forget how easy it is to launder money with cryptocurrency.
Also useless if you don't have electricity or an Internet connection.
That's not entirely accurate. Look up Caesaceous coins. There aren't many of them, but they do exist, and they are physical coins with a private key embedded under a hologram, which as long as the hologram has not been tampered with, is guaranteed to contain the amount of crypto it says, and you can trade that without electricity or internet.
Until that gets common acceptance at places like grocery stores, I'll stand by what I said.
But what u said got nothing to do with common usage.
Of course it does. You can't use a physical token if nobody will accept it as payment.
U said its useless if u dont have electricity and an internet connection. If u meant to talk about it being usless if its not widely accepted then u should have talked about that instead of talking about an already solved issue. Words have meanings thats their purpose if u use them to convey an idea when u actually meant to convey a completly different idea then perhaps u should have used completly different words?
So it's just a significantly more complicated and expensive coin.
I'm not sure how much more expensive it is, but I wouldn't think it would add much to the price of the actual crypto that's in it.
But unless you use Monero or other crypto with similarly strong privacy all you do is leave a permanent trail for agencies to investigate.
Using shell companies on the Cayman Islands might be the safer approach.And even with Monero, it's about the same as physical cash, if you avoid the bank reporting for suspicious transactions. And if the police are suspicious, Monero is arguably worse because there's the possibility to get transaction data if the police can access your device, whereas that's not a thing w/ cash. And then you still have the issue of converting back to fiat, which either involves a KYC service (in most countries) or P2P cash transactions, in which case we're back to cash.
Money laundering will happen regardless, and IMO it's not worth the privacy violations required to attempt to eradicate.
Or just bypass illegal sanctions.
All of those points are true for some crypto projects, and untrue for others. There are some projects with their own Blockchain that have ultra-low fees, others with quick transactions, and others whose algorithms are much more environmentally friendly. (There are other projects and tokens they are full-on scams with no redeeming value whatsoever).
And consumer protections are something that can be added to crypto, but out of necessity they involve trusting some entity to arbitrate when protection is required. Cryptocurrency is designed to be trustless, so any protections need to be added on top, like the escrow someone else talked about.
The worst thing that ever happened to crypto was for it's price to balloon. Because improving all those other aspects that make it usable as a currency took a back seat to "wen moon?". OG Bitcoin explicitly rejects improving its energy footprint and fee structure because it sees itself as a Store of Value.
If ur using shitcoins and memecoins sure. If ur using monero then u have significantly lower transaction fees, zero surveillance, zero advertiser tracking, and u cant be debanked or have ur funds frozen.
U still have consumer protections when ur using it as a currency (like intended) cos its not like someone selling something for monero is suddenly above the law just means that if u send ur money to a Nigerian prince u aint getting it back, ohh and u can still use crytpo through a traditional exchange with all of said consumer protections.
Monero transactions are mined every minute and can be verified instantly. To fool this u would either need to make multiple transactions within the span of 1 minute (perfectly timed to the unpredictable timings of the blockchain) or collude with the entire network to delay mining a particular transaction.
The environmental impact of monero is extremely minimal compared to other coins due to it using an algorithm limmited by cpu cache not compute like most currancies. Also crypto is playing a significant role in providing a way to instantly shed load from the grid in responce to the unpredictable nature of renewable energy (most cryto mining operations make more money from selling energy to the minute by minute power grid than they do from mining crypto).
And it's not like the traditional banking industry is energy efficient. I would argue that they use more power especially if you consider the lifestyle of banking executives.
The energy usage was criticized not in absolute terms, but in relation to the numbers of transactions. Cryptocurrencies are criticized for consuming more energy while being much lower in volume.
That said, we do need projects like Monero now. At least at the present moment, it is the closest we have to "digital cash".
Thats before u account for building a branch in every town/city, the cost of the employees driving to work, the driving of physical cash from place to place etc etc.
I'm sure a single mainframe consumes considerably more that some mining farms.
Define mainframe, because modern mainframes are just sets of regular rack servers (or rack form factor chassis servers). If you mean the old ones then yes, because they're far less power efficient.
You're dead wrong.
Have you ever heard of Bitcoin mining farms? Their electric energy consumption dwarfs a league of mainframes.
Am IBM Z16 may need several dozen kW at full load: https://www.ibm.com/docs/en/systems-hardware/zsystems/Z16M-A01?topic=requirements-general-electrical-power
Fully equipped with 8 PDUs and 4 BPAs a single mainframe is limited to an electric power of 173 kW.Well, the Bitcoin miners are estimated to use around 175 TWh of energy annually, which equals an electric power of around 20 GW : https://www.statista.com/statistics/881472/worldwide-bitcoin-energy-consumption/
This is several orders of magnitude above that of all the mainframes in the world - unless there are more than 116 million mainframes of that type in operation and running at full load.
XRP at least has instant feeless payments. No consumer protection though. Some banks use it for intra-bank transfers.
XRP is fast, but neither instant (usually around 4 seconds) nor without fees:
https://xrpl.org/docs/concepts/transactions/transaction-costThe cherry on top is the skewed token distribution.
Thanks, but no thanks!
Most of these things are only true for bitcoin. Basically every other cryptocurrency is way more efficient, instant, and has extremely low fees. Bitcoin had a bit of a hostile takeover a few years ago because companies that run bitcoin exchanges wanted to incentivize their own alternatives where the exchanges could pocket more of the fees, and almost every problem in crypto now derives from that takeover.
False, false, and mostly, if not entirely false.
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Higher transaction fees: It is totally possible to send literally any amount of money around the world in a cryptocurrency for less than a penny on multiple different cryptocurrencies. You can send this amount of value from anywhere with an internet connection at any time of day or night and the receiver will have access to it very nearly instantly.
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slower transaction times: Transactions on multiple ethereum layer two networks such as polygon or other layer one networks such as solana settle very nearly instantly and on bitcoin seven blocks is considered fully final with no possibility of reversal which takes 70 minutes and on Monero 10 blocks is considered final, which takes 20 minutes. A credit card transaction takes 3 days to fully settle, as does an ACH transaction.
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Environmentally wasteful: How many resources does the banking sector use to build bank branches requiring mining of stone, etc. Electricity, gasoline to use armored cars, gasoline to transport employees to work, etc. Proof of work mining does indeed require a lot of electricity, but it also requires a lot of extremely cheap electricity. And a lot of extremely cheap electricity is renewable electricity such as hydro and solar. So a lot of proof of work mining uses these renewable resources. There are also other security mechanisms such as ethereum with the proof of stake method, which uses very little energy. And there are other more novel proof mechanisms such as proof of burn, etc. that also use very little energy.
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Consumer protections: Any crypto commerce site worth its salt implements multi-signature escrow so that there are three parties to a transaction, the buyer, the seller, and an arbitrator if they are required. Since you can self-custody your cryptocurrency in your own wallet, you do not need to worry about protections from fraud, such as credit card theft, because it's a push-based method and not a pull-based method. Some thought must be given to holding large amounts of what is basically cash, but that is easy enough to do through multi-signature accounts and keeping only a small amount of crypto on a mobile wallet or laptop at all times.
And for 3, pick a more environmentally friendly cryptocurrency, like Ethereum. Monero is probably also way more efficient than Bitcoin since it's not profitable to mine, so you only get enthusiasts doing it instead of big mining operations.
It may be profitable to mine Monero, but the fact that it uses an algorithm that is strictly available on CPUs only helps keep the power usage way down because you can't make specialized equipment and put it in a single location. That way, nobody has an advantage over anybody else except for the pure amount of CPUs they can purchase. But literally anybody that has a mobile phone or a computer of any kind can mind Monero if they wish.
Right, and all of that is why it's unprofitable to mine Monero. So you end up with enthusiasts mining because they care about the platform, not because they're trying to make money. Transaction costs stay low because there are a lot of enthusiasts, and energy use also stays low because mining farms aren't really a thing, so there's a lot less waste. I imagine a lot of people run a miner on a system that's going to stay up 24/7 anyway (e.g. NAS or VPS that serves other data), so there isn't really an increased amount of energy usage.
It's nearly impossible to estimate how much energy it uses though, but I wouldn't be surprised if it's a blip compared to Bitcoin, even adjusted for total number of transactions processed.
Yep, that's a totally fair point. I mine on the same machine that runs my node that I connect my mobile wallet to over tor and it runs a couple of other services for me, so I have to leave it on all the time anyway.
Yup, I'm planning on doing the same. I have a VPS that reverse proxies to my NAS, both of which run 24/7 and have very little CPU load normally. My VPS doesn't allow crypto mining, but it probably allows running a node, or I can just pass it through to my NAS.
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All of what you say applies to most cryptocurrencies.
But I'm aware of at least one digital currency that is- without fees
- usually confirmed in less than one second
- eco-friendly because it requires no special hardware to operate the network and it uses very little energy
It has also zero inflation, is decentralized and designed with incentives that increase the degree of decentralization over time.
It also has no built-in limits regarding transactions per second.Consumer protection without middlemen/centralization is hardly possible.
I'm hesitant to drop a name here, because I don't want to come across as a shill, but if you're interested we can discuss the attributes of this gem.
Why not just GNU Taler? It has been around forever and can be deployed for pretty much any scale you want. Some places have used it for conferences and whatnot.