The past decade has seen cryptocurrencies rise from relatively unknown fringe currencies to headline-hitting digital assets capable of shaking up the financial industry. These currencies have recently become one of the most valuable assets on the planet, and experts predict that coming years could continue to see their usage surge. But while this is great news for investors, the rise of cryptocurrency isn’t completely without its downsides.

One of the key problems of cryptocurrencies lies in the environmental impact that digital transactions have. The process of mining for bitcoin is particularly energy-intensive, due to the complex mathematical calculations that must be completed to create each and every new bitcoin. Consider this on a global scale, and you might be surprised to hear that the amount of power needed to deal in cryptocurrencies is similar to that of a small country.

The term cryptocurrency was relatively unheard of 10 years ago, but it’s since become widely recognised. It refers to forms of digital or virtual currencies which are based in the art of cryptography, using highly complex encryption algorithms. They are designed to be incredibly secure, with virtually no chance of counterfeiting, these digital assets are resistant to inflation and easily portable.

Criptocurrency and blockchain: which difference?

Terms like cryptocurrency and blockchain are often used interchangeably, but they actually have quite different meanings. Blockchain is the very technology that cryptocurrencies rely on. It forms the basis of some of the best-known digital currencies in the world, such as Bitcoin.

Enviroment: how cryptocurrencies have an impact?

At first glance, digital currencies may not appear to pose much of a threat to the environment. But the real impact of dealing in cryptocurrencies is now emerging, and it paints a stark picture.

Digital assets such as Bitcoin have a considerable environmental footprint, due to the amount of energy required to power the algorithms behind them. While this could theoretically be done using renewable energy, in reality it usually isn’t. China is a leading player in mining for Bitcoin, and 60% of the energy it uses to do so is powered by coal.

While cryptocurrencies on the whole tend to be fairly damaging to the environment, some types of digital currency are known for having less of an impact than others.

And for the future?

New cryptocurrencies continue to emerge, but there’s one trend that’s starting to cause a shift in the creation of digital assets: sustainability.
With concern growing over the ecological impact of blockchain-based currencies, developers are turning their attention to new ways of offering all the benefits of digital currencies, without the hefty carbon footprint.

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