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Sustainability solution or climate calamity? The dangers and promise of cryptocurrency technology |

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A “pointless way of using energy”?

The amount of energy required to run the Bitcoin network is staggering: Tim Berners-Lee, who is considered to be the inventor of the World Wide Web, has gone so far as to call “Bitcoin mining” “one of the most basic senseless uses” to denote energy. “

Bitcoins do not exist as physical objects, but new coins are “mined” or circulated through a process that uses powerful computers to solve complex math problems. This process requires so much energy that the Bitcoin network is estimated to use more energy than several countries, including Kazakhstan and the Netherlands. And since fossil fuel power plants still make up a large part of the global energy mix, Bitcoin mining can be said to be partly responsible for producing the greenhouse gases that cause climate change (although the climate impact is far less than that of heavyweights like Agriculture, construction, energy and transport).

Another problem is the energy consumption per transaction, which is enormous compared to traditional credit cards: for example, each Mastercard transaction is estimated to use only 0.0006 kWh (kilowatt hours), while each Bitcoin transaction uses 980 kWh, enough according to some commentators Powering the average Canadian home for more than three weeks.

UNDP Zambia

Garbage collectors comb through urban landfills in Zambia.

An important driver for sustainable development?

Despite these problems, UN experts believe that cryptocurrencies and the technology that powers them (blockchain) play an important role in sustainable development and can actually improve our dealings with the environment.

One of the most useful aspects of cryptocurrencies from the UN perspective is transparency.

Because the technology is resistant to tampering and fraud, it can provide a trustworthy and transparent record of transactions. This is particularly important in regions with weak institutions and high levels of corruption.

The World Food Program (WFP), the largest UN agency providing humanitarian cash, has found that blockchain can help cash reach those who need it most.

A pilot program in Pakistan has shown that it is possible for WFP to send cash directly to beneficiaries safely and quickly without the need for a local bank. The Building Blocks project has also been successfully tested in refugee camps in Jordan to ensure that the WFP can create a reliable online record of every single transaction.

If this can work for refugees, it can work for other disadvantaged, vulnerable groups as well. The authors of a report from the United Nations Environment Agency (UNEP) suggest that the technology could improve the livelihood of garbage collectors who make a living in the informal economy.

A transparent monitoring system, the report says, could keep track of exactly where and how the recovered waste is being used, as well as identify who picked it to ensure that the right people are being rewarded for their efforts.

Air pollution is harmful to our health, but there is often a lack of local data that is made available to find solutions.

Unsplash / Chris LeBoutillier

Air pollution is harmful to our health, but there is often a lack of local data that is made available to find solutions.

Blocking environmental degradation

The potential of the blockchain for environmental protection has been tested in a number of other projects by the UN and other organizations. These range from a tool developed for the World Wide Fund for Nature (WWF) to combat illegal fishing in the tuna industry, to a platform (CarbonX) that converts greenhouse gas emissions reductions into a cryptocurrency that can be bought and sold by the manufacturer and consumers with a financial incentive to make more sustainable choices.

For UNEP’s DTU partnership (a collaboration between UNEP, the Technical University of Denmark and the Danish Ministry of Foreign Affairs) there are three main areas where blockchain can accelerate climate action: transparency, climate finance and clean energy markets.

Data on harmful greenhouse gas emissions in many countries are incomplete and unreliable, the partnership said. Blockchain solutions could provide a transparent and trustworthy way of showing how nations are taking action to reduce their impact on the climate.

Climate finance – investments that help slow climate change – could be encouraged if carbon markets expand and businesses and industries make the transition to low-carbon technologies.

And blockchain could be an important part of accelerating the diffusion of renewable energy sources like wind and solar power. Since these sources are intermittent and decentralized by their nature, new forms of energy markets are needed.

Tools that use blockchain technology can help create these markets and end our dependence on fossil fuels.

Find low energy solutions

Despite all of these potential benefits, the huge energy consumption associated with the technology is one of the biggest hurdles to overcome and many players in the industry are working to address this problem.

For example, the Ethereum Foundation, the organization behind the cryptocurrency Ethereum, is working on a new method for checking transactions. By switching to a different method (called a Proof of Stake, or PoS), the foundation says the energy costs of each transaction could be reduced by 99.95 percent.

At the same time, many players in the industry want to make sure that the energy consumed by the industry is completely carbon-free.

In April 2021, three major organizations (the Energy Web Foundation, the Rocky Mountain Institute and the Alliance for Innovative Regulations) established the Crypto Climate Accord, which is supported by organizations from the fields of climate, finance, NGOs and energy.

The aim of the deal is to “decarbonise the industry in record time” and achieve net zero emissions in the global crypto industry by 2030.

Gold has always played an important role in the international monetary system.

Unsplash / Jingming pan

Gold has always played an important role in the international monetary system.

The ups and downs of the cryptocurrency

Cryptocurrencies are still in their infancy and there are still many technical and political challenges to overcome, as shown by the volatility of some of the most popular versions.

A single tweet from tech billionaire Elon Musk can make Bitcoin’s value rise or fall; El Salvador announced plans to make bitcoin legal tender in June, a month after Beijing announced crackdown on bitcoin mining; while another cryptocurrency, Dogecoin, was also traded extensively, with huge, widely reported jumps and dips in its value (again thanks in part to announcements by Mr. Musk), despite being created as a hoax.

Nevertheless, many financial experts believe that these teething troubles will be ironed out at some point and that cryptocurrencies and other blockchain-based financial instruments can become mainstream: A number of central banks are planning their own digital currencies and so-called “stablecoins” that can be linked to precious metals such as gold or national currencies , as the name suggests, could become stable and reliable investment opportunities.

If the weakest are to benefit from the promise of blockchain technology and really have a positive impact on the climate crisis, more technical research and a stronger international dialogue involving experts, scientists and political decision-makers are required.

“The United Nations should continue to experiment in the blockchain space,” says Minang Acharya, one of the authors of a recent UNEP foresight briefing on blockchain applications. “The more we experiment, the more we learn about the technology. This will likely improve our UN-wide knowledge of blockchain, our understanding of the environmental and social impact of mining operations, and improve our chances of dealing with any problems the technology may pose in the future. “

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Cryptocurrency

US Senator Calls On SEC Chairman To Provide Regulatory Clarity On Cryptocurrencies – Regulation Bitcoin News

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A US senator has asked the chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, to provide clear guidance on cryptocurrency regulation. The Senator stated that in many enforcement actions, “the SEC has failed to identify the securities involved or the reasons for their status as securities, which would have provided much-needed public regulatory clarity.”

US Senator wants the SEC to provide clear guidelines on crypto regulation

Senator Pat Toomey, ranked member of the U.S. Senate Committee on Banking, Housing, and Urban Development, wrote a letter to SEC Chairman Gary Gensler on Friday regarding the regulation of cryptocurrencies.

His letter followed Gensler’s testimony before the Senate Banking Committee last week. Toomey began:

I’m writing to address the concerns I raised at the hearing about the need for regulatory clarity around emerging technologies such as cryptocurrencies, including stablecoins.

“In order for investors to benefit from a fair and competitive market, regulators must proactively provide rules on how to get to industry,” the Senator said that the SEC “has instead adopted a strategy of regulation through enforcement in this area.” To date, the commission has launched more than 75 enforcement actions against the crypto industry, fines and penalties totaling more than $ 2.5 billion against crypto companies and individuals.

At the Senate hearing, Gensler extolled “the SEC’s success in pursuing crypto-related enforcement measures.” Toomey noted, however, that “in many of these enforcement actions, the SEC failed to identify the securities involved or the reasons for their status as securities, which would have provided much-needed public regulatory clarity.”

SEC Commissioner Hester Peirce is also concerned about the SEC’s approach to crypto regulation. She criticized her own agency in August for taking an enforcement-oriented approach to crypto regulation.

The Senator from Pennsylvania noted that the SEC’s approach was tied to Gensler’s belief that “the likelihood is pretty slim” that a given cryptocurrency platform has no securities. For example, Gensler told Senator Elizabeth Warren at the hearing that the Nasdaq-listed crypto exchange Coinbase (Nasdaq: COIN) could have dozens of tokens, which could be securities.

Recently, Coinbase was forced to abandon its plan to launch a loan product after the SEC threatened legal action and the company alleged it had received no explanation from the regulator. In the meantime, the security guard is in an ongoing proceeding with Ripple Labs and its executives as to whether XRP is a security.

Senator Toomey emphasized:

The SEC has a responsibility to do more than just provide probabilistic estimates.

The Senator concluded his letter with a list of questions for Gensler to answer for additional guidance on crypto regulation.

What do you think of Senator Toomey asking SEC Chairman Gensler to provide clear guidance on crypto regulation? Let us know in the comment section below.

Photo credit: Shutterstock, Pixabay, Wiki Commons

Disclaimer of Liability: This article is for informational purposes only. It is not a direct offer or solicitation to make an offer to buy or sell, or a recommendation or endorsement of any product, service, or company. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author are directly or indirectly responsible for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Cryptocurrency

Crypto plunge a wake-up call — and tax opportunity — for investors

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A detail of the statue of Satoshi Nakamoto, a presumed pseudonym of the inventor of Bitcoin, in Budapest, Hungary.

Janos Sorrow | Getty Images News | Getty Images

The price of popular cryptocurrencies like Bitcoin and Ethereum fell on Friday after Chinese officials stepped up crackdown and essentially ruled crypto illegal.

Government intervention, while substantial, does not necessarily mean that financial advisers believe investors should run into the mountains. But it’s another reminder that crypto holdings are subject to wild fluctuations in price, they said.

“I wouldn’t call this the end of the world,” said Leon LaBrecque, accountant and certified financial planner with Sequoia Financial Group, based in Akron, Ohio. “It’s just a wake-up call.”

“This should be in recognition of the fact that it is a volatile asset and that all the ups and downs are a match,” he said.

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This volatility opens up opportunities for tax planning that may only be a few months away, advisors said, depending on the Democrats’ final compromise on federal tax law.

Bitcoin prices had fallen 6% to around $ 42,000 at 3 p.m. ET Friday afternoon. Ether, the second largest digital currency, fell more than 8% to around $ 2,890.

The People’s Bank of China terrified investors after declaring all crypto-related activity illegal. These activities include, for example, trading services and foreign exchanges. This is the latest move in the country’s wider crackdown on digital currencies.

The ban on Bitcoin and other cryptocurrencies can be of concern for current and prospective investors as the government limits buyers for a significant segment of the world’s population, advisors said. And other governments are likely to have additional regulations as well, they said.

But these can’t make much of a difference in terms of long-term prices. A daily slump in crypto costs, which may feel significant at this point, is likely just part of a longer-term price correction towards an average price, advisors said.

“Will government regulation make cryptocurrencies volatile? Yes,” said Wayne Wilbanks, managing principal and chief investment officer at Wilbanks Smith & Thomas Asset Management in Norfolk, Virginia. “Will it make crypto redundant? No.

“I don’t think China’s regulation, or even US regulations, will make that much of a difference in the long run,” he added.

Bitcoin, for example, is still up around 40% year-over-year despite the slump on Friday. (It’s far from its April high of around $ 63,000, however.)

To this day, volatility is a signature of cryptocurrencies. This year, for example, prices have fluctuated sharply after tweets from Tesla co-founder and crypto enthusiast Elon Musk.

Advisors usually recommend that investors allocate a small portion of their portfolio (anything that they would lose entirely) because of the risk involved.

Tax advantage

Investors can take advantage of recent volatility, according to Jeffrey Levine, CFP, Accountant and Chief Planning Officer at Buckingham Wealth Partners in Long Island, New York.

Equity, crypto and other investors can “reap” investment losses for a tax advantage. Basically, you can sell a lost investment (e.g. Bitcoin) and use the loss to destroy the gain on a winning investment elsewhere in your portfolio.

This “tax loss harvesting” reduces (or eliminates) the capital gains tax owed on the estimated value of an investment sold.

However, unlike stock investors, crypto investors who are sold out can quickly buy back into the same or similar digital currency. As a result, if the volatile asset price recovers shortly thereafter, they can receive the above tax benefit as well as a portfolio benefit.

House Democrats proposed closing this crypto loophole after this year to reform tax law.

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Cryptocurrency

A financial TikTok influencer with almost 500,000 followers says bitcoin is going to ‘get slayed’ – and shares how cryptos and stablecoins make up his trading strategy | Currency News | Financial and Business News

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Mason Versluis

  • 21-year-old Mason Versluis has almost 500,000 followers on TikTok, where he gives tips on crypto and markets.
  • He recently spoke to Insider about how he chooses which coin to invest in and why.
  • Versluis said he would like to see bitcoin “slayed” as other coins have far more real-world use cases.
  • Sign up for our daily newsletter here, 10 things before the opening bell.

Bitcoin is the largest cryptocurrency by market value and is dwarfing its competitors for the time being. But the rise of crypto rivals with far more real world uses means it will be dethroned sooner rather than later, according to financial TikTok influencer Mason Versluis.

The 21-year-old Versluis also bears the username Crypto Mason and has almost 500,000 followers on his TikTok account, which he uses to shoot short videos to educate his viewers about crypto and the markets.

Versluis, who has been trading crypto since he was 15, recently spoke to Insider about his prospects for the market.

“The psychological thing that Bitcoin is always number one and king can be gone. By ‘kill Bitcoin’ I mean that I want something to happen and then we’ll see what happens afterwards, ”said Versluis.

Bitcoin has a market capitalization of just under $ 800 billion, according to CoinMarketCap, of the roughly $ 1.9 trillion that the entire crypto market is worth.

In the last 12 months it has gained almost 350% in price, but Versluis believes there is more value elsewhere.

“My dad told me about XRP when I was 17 and I’ve been back ever since,” he said.

“I’m one of those people who think XRP is a ‘better bitcoin’. And it actually solves the payment problem better than Bitcoin ever can or will, ”he added. Ripple Lab’s XRP token is used in fast payment systems – an area where Bitcoin can’t really compete given the comparatively slow network speed. One of the bigger crypto coins, XRP has kept pace with Bitcoin over the past year, rising 320%.

Ether, the native token of the Ethereum network, is the second largest cryptocurrency and accounts for around 20% of the market. The blockchain’s ability to run decentralized financial applications, smart contacts, and other protocols has resulted in an onslaught of investor money in ether this year, up nearly 800% over that time.

“It must have use cases, that is: Does this token do nothing? Am I only buying this token because I think it will increase in value?” said Versluis.

“That’s what I personally invest in, just because of the potential – they actually do something. Ethereum has so many decentralized applications built on it, ”he added.

When it comes to taking a position in a coin, Versluis says he’s not a day trader.

“It’s a lot of stress, you have to sit at the computer and watch the markets,” he said.

“I’m going to see an opportunity, put in some money and basically ramp up this rocket until I think it’s time to sell it. I sell them off and put them in a stablecoin like USDT or USDC. And then I just make profits and reinvest part of it in my main portfolio. So it’s a slow process, “he said.

As a relatively young trader who says that part of his passion for crypto is the decentralized, free nature, the question arises what Versluis thinks about the regulation in this market. Unlike many crypto fans, he’s not against it. However, he believes that all rules have to adapt to the reality of the crypto market and that one size does not fit everyone.

“It’s a digital world. And we’re only getting more digital and virtual, ”he said.

“You can’t just take the old system and the laws and slap it on crypto. It doesn’t work.

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