By Gabriella Gomperts, Features Editor
Cryptocurrency has upended the way the world traditionally viewed currency, and while there are possible upsides to investing in crypto, there are also potential risks. With Bitcoin officially hitting the $100,000 mark on December 4, it appears investors are still hopeful for what the future has in store for crypto.
One could view crypto as a digital currency spent in the same manner as paper money. Crypto uses a technology called blockchain that essentially records every transaction on an encrypted digital ledger. Each transaction is secured using cryptography, which makes it super difficult to compromise or hack. Further, crypto is decentralized, meaning it isn’t controlled by banks or governments. It’s maintained purely by privately owned computers.
Crypto is “created” through mining. Crypto is mined when computers solve complicated equations, and the first computer to solve the equation earns the new cryptocurrency. Cryptocurrencies, like Bitcoin, have a finite amount of cryptocurrency to mine, which maintains the currency’s scarcity and fluctuating value. Bitcoin is projected to be completely mined by 2140. Mining also validates transactions, ensuring the ledgers and transactions match. An individual’s crypto is stored in a digital wallet that’s protected by a secret password known as a private key.
Professor James Kahn, Chair of the Department of Economics at YU, told the YU Observer why crypto is being rated highly now. “I think it’s being used to a limited extent now, but it’s real potential value, and why Bitcoin is closing in on $100,000 now, is because its usefulness will potentially increase a lot in the future,” he said.
The extent to which it can be used in the future, however, is unclear to economists. This, and other inherent risks associated with crypto, like fraud, is why its value is so volatile. “I also have concerns about these platforms,” Khan said, citing certain scandals, like the collapse of Sam Bankman-Fried’s fraudulent crypto exchange company FTX, that have occurred in the past.
Khan has further safety concerns about crypto. “I can’t claim to fully understand the nature of the blockchain and the security,” he said. “It could be stolen, [or] what happens if you lose the key? There’s all sorts of issues like that which make me hesitant.”
Chushim Botach (SSSB ‘16) has been investing in crypto since its inception and believes it will play a vital role in global banking. “I think Bitcoin is here to stay, and then in the long term, it’ll be accepted more widely in the banking systems throughout the world,” he told the YU Observer. “When it comes to blockchain technology in general, I think we’re just at the beginning of what blockchain technology can do for us, in every industry.”
Botach is optimistic that crypto will survive the initial excitement of first-time investors. “Everyone wants to try to get rich quickly. I think because of that, these bubbles form with a lot of hype,” he said. “I think that there’s more bubbles to come within Bitcoin’s universe, but I think that overall, Bitcoin’s going to last and it’s going to go way higher than it is right now.”
Sara Hellman (SCW ‘25) has concerns about crypto’s impact on the environment. “Between greenhouse gas emissions, electronic waste and the water footprint, crypto as it functions has an extreme impact on the environment,” she told the YU Observer.
Greenhouse gas emissions are hard to track because it’s on private servers, but it’s speculated that a lot of energy is being used. Some studies show that mining crypto results in massive rates of energy consumption, on par with countries with large populations, such as Pakistan.
The computers and hardware used to mine crypto don’t last very long, requiring constant replacements. “There are no definite numbers out there because of the role of private servers in this industry, but the short lifespan of the hardware creates an excessive amount of e-waste,” Hellman said.
Hellman is also concerned about crypto’s impact on the drought most of the US is currently facing. “Bitcoin itself has possibly reached a water footprint of 2,237 gigaliters in 2023, which is harmful when about 77.8% of the United States population is being affected by abnormal dryness if not drought,” she said. “This waste of water could be mitigated by implementing immersion cooling.”
Although some could argue that crypto enables opportunities to support renewable energy, mining crypto currently requires excessive amounts of energy, creating more greenhouse gasses.
Crypto has a lot of potential for the future of personal, national and global finance. However, it’s unclear precisely how crypto will shape the future of , especially with climate change and the well being of the environment hanging in the balance.
Photo Caption: Cryptocurrencies
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