How Crypto will Change the World (or not)?

I am sure that you might have heard the word Blockchain, Metaverse, Web3, NFTs, crypto, etc quite often in 2021. The thing that you can make a lot of internet money by just holding these crypto assets is just unbelievable. Just a few days ago, I saw the news that some guy became a Millionaire from some dog-related meme money (He was holding Elon's Dogecoin).

Here I am not going into "How does this Blockchain works? What is the underlying technology beneath it?" but, is this crypto takeover a good thing? So, I had a debate with myself on Crypto as follows:

Crypto Skeptic: Below is the graph of the electricity consumption required to run a Bitcoin network, just Bitcoin, not any other Cryptocurrency. Why does it take so much energy to create internet money? It's because the security of Bitcoin and Ethereum depends on thousands of computers racing to randomly guess 64-digit number first, day and night, forever. As the price of Bitcoin goes up, more computers join in which leads to more energy and more e-waste, which is responsible for climate change.

Crypto Optimist: Yes, these computers use a lot of electricity, but not all electricity is produced by burning fossil fuels. According to this recent survey, 3rd Global Cryptoasset Benchmarking Study, 38 percent of electricity comes from renewable sources such as solar panels, wind turbines, etc. Also, there's this one oil facility in Utah, where they need to burn the natural gas because it's a by-product from oil extraction. So, instead, they put a crypto mine in a shipping container that uses natural gas as electricity to run their computers. Now, why are we singling out crypto for using energy? Everything uses energy.

Crypto Skeptic: Here, we are talking about internet money that's built off of electricity and fancy math. Every week some crypto company gets hacked or runs some scam or claims that their scam was a hack. There's very little consumer protection. The most recent example is Squid Games Cryptocurrency. The creators said it was like play to earn online game, which is going to release next month, they got all the hype going and the value of currency ran up, and boom, the creator cashed out and disappeared with over 21 crore INR. Here's the price chart of Squid Cryptocurrency.

Now, you would say that why people are buying it? People are willing to buy whatever if there's enough hype. You might have read the above Dogecoin Millionaire example. A lot of the financial systems are human psychology, but when you invest in a home or a business stock, you are betting on something that has a track record of being useful to people. With crypto, you are investing in a belief that a bigger group of followers is coming behind you and each of those people will be betting on the same belief. Some of the top people who promote crypto have invested a large number of their capital in those crypto-assets and want people to do the same so that the price goes up.

Crypto Optimist: It is true that there's a lot of nonsense and scams happening, but that's what happens when there's an innovation. People jump in and try things out, they make mistakes, people get scammed, but eventually, the technology matures, that's where we're headed here. Look at the first year of Bitcoin, January 2008, the economies were in a free fall. Banks and regulators had massively mismanaged our financial systems. Then, out of nowhere, someone named Satoshi Nakamoto proposed the idea of Bitcoin, which was a peer-to-peer Electronic Cash System, something that doesn't need Governments or Banks. According to Nakamoto, the root problem of conventional currency is all the trust that is required to make it work. Bitcoin could solve this by using the same ethic that had built the Internet. Connecting strangers(computers) from around the world without the need of middlemen. So, this is useful, because detaching money from these central institutions is useful for a lot of things.

Crypto Skeptic: You mean like buying drugs?

Crypto Optimist: Well yes, but also a bunch of other things that you can't imagine. Consider Nigeria, last year, the governments froze the bank accounts of 20 people who were protesting against police brutality in the country. But some of them were able to receive donations through Bitcoins because the government couldn't freeze that. Another example, Venezuela, where a stack of money is worth nothing because of hyperinflation. This wiped-out people's life savings because of trust in these big institutions/governments. These problems don't happen with Bitcoin because no government can freeze your account, no government can print more money and de-value your coins, it is controlled by a community.

Crypto Skeptic: I believe that the blockchain is secure, its public record, it's verified by all this fancy technology. But people aren't interacting with blockchain directly, we still need some companies, that are vulnerable to being hacked, to buy and sell cryptos. Now Let's say that our crypto assets are safe and never get hacked, but what about the insane levels of volatility? It is great if you are a risk-tolerant guy with a ton of money to play on the internet. Consider El Salvador, the first country to accept Bitcoin as legal tender. But the app where you can exchange and buy Bitcoin is controlled by El Salvador's Government. Eventually, the middlemen(government) come into this picture.

The volatility of Bitcoin:

Crypto Optimist: You are focusing so much on how it works NOW. Remember Web 1.0 in the 1990s, the internet in the 90s was limited to read-only experience. It was like a digital encyclopedia that is connected to other people's computers. Then came Web 2.0, the webpages went from static to dynamic, where people can interact with websites, people can write blogs, upload them on Facebook, create content on YouTube and participate on the Internet. But in doing so, we created centralized digital institutions owned by giant tech companies which make billions of dollars by showing us ads based upon our data. Now, we are moving into Web 3.0, It will allow us to move money, make purchases, connect with people without the permission of Mark Zuckerberg or the Government of India. They are not part of this equation at all. It is an entirely new type of internet. It is the internet of people.

Crypto Skeptic: Are you hearing yourself? Let's get to the facts.

Crypto Optimist: This is happening. Ethereum, which uses the same technology as bitcoin, allows us to do tons of things. It uses something called Token.

Crypto Skeptic: All I see tokens being used for is selling digital art for millions of dollars on the internet.

Crypto Optimist: Yes, making digital things scarce on the internet is one of the first major applications of this. But this is just the beginning. Imagine borrowing money, signing contracts, investing without the need of middlemen. Now imagine the internet that is owned and governed by the users. Instead of logging in on these giant tech companies such as Twitter, Facebook, and giving all your data, you log onto a unique wallet that holds all of your personal information, all of your crypto assets that are protected by cryptography. Your data isn't owned and stored by these giant tech companies. It is stored on encrypted ledgers and you get to decide who to share it with.

Crypto Skeptic: I would love a world where users own their data and share decision-making and revenue, but the blockchain is secured by cryptography which is inefficient (takes a lot of time and energy) by design. Blockchain is a very Narrow tool and people are going to lose a lot of money before they realize that that's the case.

That's it from my side. I believe that we are still in the early stages. We don't know what the future is going to be like. Do you agree with the optimistic view of crypto or do you think this is just another doubtful technology that will have its day and be a bubble that eventually bursts? So, keep your mind open for this technology but not so open that your brain falls. I will be happy to read your thoughts in the comments down below

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