Is it positive to have a fully digitized global financial system?
This is where the controversy comes into play. On the one hand, there is the high volatility of cryptocurrencies, which invalidates them when it comes to everyday shopping and restricts them to stock market-type investment transactions. On the other hand, there is the great controversy of associated energy consumption and pollution.
Generating and managing cryptocurrencies requires the use of a large network of computers that consume large amounts of electricity. However, there are experts who argue that the cryptocurrency system does not consume more energy than the traditional monetary system, on the contrary. Other experts estimate that a bitcoin-based monetary system would double global energy consumption. And some argue that it certainly consumes energy, but like any other industrial sector. However, it is true that bitcoin in particular is highly energy inefficient compared to other currencies for a design reason. Broadly speaking, its architecture is designed so that as the number of currencies increases, so does the computational capacity required for the well-known mining to create new bitcoins. This is done for security reasons. So a few people with a lot of computing power can't get control of a currency that has become very important. And more computing power means more computers and more electricity consumed. However, due to the very characteristics of bitcoin, it is not possible to really know how much energy it consumes. It is estimated that it currently uses about 0.6% of the electricity consumed worldwide, but this varies greatly according to the study. Experts propose two solutions.
The first is to optimize the computers that are part of the bitcoin system. They argue that little by little the industry will improve energy consumption for a matter of costs.
Another option is to opt for digital currencies that have a much more energy efficient architecture, such as ethereum. It is the second most popular currency, and has learned from the mistakes and limitations of bitcoin.
Other experts believe that bitcoin will go bankrupt because it is not energetically scalable due to a design flaw - or simply because its creators did not imagine that it would be so successful.
In any case, second-generation currencies such as ethereum consume one-sixth of the energy consumed by bitcoin, and reducing energy consumption is one of the priorities for future developments in its architecture.
It is not ruled out that new cryptocurrencies will appear with architectures focused on consuming the least amount of energy possible, especially if we are moving towards a new monetary, banking and financial system completely based on the cloud.
