An Open Letter to Those Buying Cryptocurrency

Subject: An Open Letter to Those Buying Cryptocurrency
From: Kailer A
Date: 5 Jun 2021
Image of Bitcoin

To those buying cryptocurrency,

Know the system you are buying into. It is not as simple as many online make it out to be. Cryptocurrency is not a black market banking system, and it is not the straightforward conversion of currency either.

Cryptocurrency is something that is blowing up in the media, with currencies like Bitcoin and Dogecoin being ever-present in today’s headlines. This has only been encouraged with notable celebrities and entrepreneurs like Elon Musk and Mark Cuban expressing interest in the industry of cryptocurrencies. You might see these wealthy people and decide to follow their investment. Cryptocurrency is a growing industry, which is great for the people invested into it. An expanding industry allows for people to make more money, which is something that I am sure everyone loves. The only problem is that many of the people investing into this industry are not well-educated on what they are getting into.

I have asked my friends, classmates, and family if they knew how cryptocurrency works at its most basic level. I did not get a single response about how cryptocurrency works. Even those who invested in Bitcoin or Dogecoin could not tell me how cryptocurrency functions. Because of this, I began researching what exactly cryptocurrency was and the craze surrounding it.

From my research, I have come to understand cryptocurrency better. On the most basic level, coins are “mined” by computers that compete against other computers to solve problems. The first computer to solve a problem receives coins as a reward. These coins are the items of currency that can be traded with other coins and used in exchanges of goods and services. The process is more complicated than the simplification above, but hopefully that is an understandable explanation of cryptocurrency. With this knowledge of basic cryptocurrency function, I want to explain how the problem results from the way that the process operates.

Because of the amount of time and energy required to mine for something like Bitcoin, these computers end up using a lot of electricity. One source estimates that the electricity consumption of all Bitcoin mining operations is comparable to the annual energy consumption of Sweden ( Needless to say, that is an enormous amount of energy. Using Bitcoin and other cryptocurrencies supports the mining process, which indirectly contributes to climate change through the production of electricity. Electricity production, if done from a source like coal or natural gas, releases greenhouse gasses into the air. As a result, these pollutants contribute to climate change. Cryptocurrency does not just include the fun money-making parts, it also includes the unseen production behind it.

With that said, cryptocurrency is not all doom and gloom. There are also possible benefits to cryptocurrency, like easy access to cryptocurrency and no banking fees ( Easy access to cryptocurrency means you cannot get locked out of your money as long as you have internet access. Additionally, no banking fees means that transactions, even those taking place from across the world, are extremely cheap. Numerous other possible benefits and risks exist for cryptocurrency, but the idea that cryptocurrency is straightforward is wrong.

Cryptocurrency is anything but straightforward. It exists in a gray area of modern finance, where the future is uncertain. This is not encouragement to invest in cryptocurrency, nor is it a warning about investing. I want those of you buying cryptocurrency to research the topic for yourself to make educated decisions.

Kailer, San Luis Obispo