We talked about some of the advantages of cryptocurrency previously. However, every technology which has advantages will also have disadvantages, and a risk of it being unethical in its raw form. We now want to look at some of the challenges to crypto and if there are ways to work around it.
While we’ll talk about Crypto in general, the two most common forms are bitcoin and etherium. Just remember there are literally thousands of other crypto formats out there, each with their own advantages and disadvantages as a platform.
Retrieving Your Money (Scams and Refunds)
In the old days, if you sent a check, and you found out what you purchased was bad, you could always stop payment. Likewise, if you pay with a credit card, you can ask to fight a charge. For example, I know someone who bought his wife flowers for mothers day because he wasn’t in town. The florist was to deliver the flowers, but knowing that he was out of town, opted to send flowers that were already wilted and dying. Clearly not what he had paid for. When he found out, he challenged the charge with the credit card company and got his money back.
However, once you send money via crypto, there is no central clearing house, so getting your money back is difficult, if not impossible. This is why a lot of ransomware demands to be paid in crypto.
Black Market Dealings
When we talked about data privacy we talked about how the government knows financial information about you. This has been used to bring down more than one criminal where they couldn’t necessarily prove criminal behavior, but could show that based upon reported income, they couldn’t have that type of money. Al Capone was probably the best known instance of that.
Modern day criminals are wanting to avoid a similar fate, so they will often use crypto to transfer money because it cannot be traced by any government agency. Thus a lot of black market dealings such as weapons, drugs, K&R, etc utilize crypto.
Governments not getting to account for all financial dealings is why some governments are against and even outlawed crypto in some cases. There are currently 8 countries that have banned crypto, and others that are looking at it. In the US prominent senators like Elizabeth Warren are very vocal about being against crypto and wanting to ban it. https://fortune.com/2022/01/04/crypto-banned-china-other-countries/ https://www.cloudwards.net/where-is-crypto-illegal/
This is a good example of why some people have ethical reservations about crypto. Can you support a system which can so easily be used for a nefarious reason?
Not Widely Accepted
One problem with crypto as a currency is that I cannot easily walk into most stores and purchase something with it. As I told someone who was discussing the idea of it as a currency with me, “if I can’t go to the grocery store to buy milk and bread, it’s not really a currency.” This has been a long standing argument of mine against things like bitcoin. It might be fine for investments, but it doesn’t work at currency, at this time.
Now there might be a time where you can eventually go in and purchase items at the store with crypto. Some governments are allowing crypto as part of their currency, and there are crypto ATMs, so we are getting there.
There becomes an interesting question. Should businesses accept crypto? At what point does it no longer become a business question, but an ethical question, as you might limit certain market segments from working with you if you don’t, or only, accept crypto?
Environmental Cost of Mining Crypto
As people buy and trade crypto, people need to create special transaction records to ensure they are secure. To do so, there is a computational cost associated with it. This cost is paid for in both electricity to run the computers that do these heavy calculations (which use a lot more energy than standard computers) as well as the machines wearing out faster and causing landfills to fill faster. This is especially bad since there is a lot of heavy metals and rare earth metals used in computers.
“Another estimate by Digiconomist, a cryptocurrency analytics site, places the figure at 130.3 Terawatt-hours, based on energy consumption through July 9, 2022. This computes to around 1,455.8 kilowatt-hours of electricity per transaction, the same amount of power consumed by the average American household over 49.9 days.” – https://www.investopedia.com/tech/whats-environmental-impact-cryptocurrency/
Since mining crypto can utilize as much energy as some small countries, can we from an environmental stand point, ethically use crypto if you care about the environment.
Other Issues
There are other issues with crypto currencies as they currently are. However, they tend not be ethical considerations. But, because I believe that before investing you should understand all aspects of an investment, I’ll list some below.
https://www.prescouter.com/2019/11/disadvantages-of-cryptocurrencies/
https://n26.com/en-eu/blog/pros-and-cons-of-cryptocurrency
An Ethical Look at Disadvantages to Cryptocurrency was originally found on Access 2 Learn
