Bitcoin and other cryptocurrencies use blockchain. A blockchain is a distributed database in which EVERY miner (and anybody can be a miner) holds a copy of EVERY transaction; for the Bitcoin community, Bitcoin’s inefficiency is the feature, not the bug. In this situation you don’t need central authority to verify that the transaction is valid and when you don’t have a central authority a system is difficult to monitor and regulate. In addition, ownership of a bitcoin is verified via a private key that is only known to the owner. The bitcoin address can be public, as without the private key, knowledge of the bitcoin address alone is insufficient to access it. If the private key is lost, so is the bitcoin it is associated with. To transact in Bitcoin, you only need the private key, no personal information is required.
For comparison, in the case of credit cards only the card issuer and card provider keep copies of transactions. If you ‘find’ a credit card, the name of the owner is printed on it. If you ‘find’ a Bitcoin private key, you can use it, but you still don’t know who the owner is. This degree of concealed ownership is only broken if the owner uses a Bitcoin exchange, which is increasingly required by law in some countries to collect personal information in a belated push for regulation.
“[All this inefficiency is] what gives Bitcoin its value,” said cryptocurrency researcher Peter Howson from Northumbria University. “If we say, ‘Oh, let’s make it efficient’, you’re just saying, ‘Let’s reduce the value of a Bitcoin’ — why would you do that?”
This example alone highlights why it is astonishing that so few climate activists are speaking out about the growing legitimacy of cryptocurrencies. Banks are opening up to cryptocurrency, as are superfunds and even entire countries; bitcoin gained the status of legal tender within El Salvador from 7 September 2021. While Bitcoin has the status of legal tender within El Salvador, the government cannot issue it (Bitcoin can only be mined, not issued); this deprives the government of currency sovereignty, which severely constrains its economic and social actions. Which makes you wonder, why a government would do this?
3. Who can ‘issue’ a new cryptocurrency?
Anyone can ‘issue’ a new cryptocurrency. Creation of cryptocurrencies is unregulated, opening the door to plenty of scams, pyramid schemes and fraud. Cryptocurrencies are not actually currencies, since they are not legal tender (you can’t pay your taxes with them). They are just digital ‘tokens’. What makes them interesting to people is that because they can ‘invest’ in these tokens, they are prepared to pay real money for them (this is the same as with any in-game currency). In reality, they are simply objects of speculation.
In addition, the exchanges that convert cryptocurrency for real money are also completely unregulated and subject to frequent hacks, where all ‘wallets’ are stolen. Lack of regulation means that sometimes they are stolen by the creators of the exchange. Both the speculation and the lack of regulation and oversight make cryptocurrencies extremely volatile; their value fluctuate wildly.
Given all this, I come back to why would conservation charities accept and promote a system that is designed for secrecy, lack of regulation, fraud and untraceable ownership? Indeed, why would you legitimize the very strategies used by wildlife traffickers? Why, on top of that, would you support cryptocurrencies that drive fossil fuel use and CO2 emissions through their massive energy use (which comes mostly from cheap coal, the dirtiest fossil fuel)?