Why I'm Boycotting Crypto Currencies

Unless you've been living under a rock somewhere, you probably have heard about the crypto currency called "Bitcoin".  Lately its skyrocketed in "value", and a number of other currencies based on similar mathematics have also arisen.  Collectively, these are termed cryptocurrencies.

The idea behind them is fairly ingenious, and based upon the idea that by solving "hard" problems (in terms of mathematics), the currency can limit how many "coins" are introduced into the economy.  Both the math and the social experiment behind them is something that on paper looks really interesting.

The problem is that the explosion of value has created a number of problems, and as a result I won't be accepting any of these forms of currencies for the foreseeable future.

First, the market for each of these currencies is controlled by a relatively small number of individuals who own a majority of the outstanding "coins".  The problem with this is that by collusion, these individuals can generate "fake" transactions, which appear to drive up demand on the coins, and thus lead to a higher "value" (in terms of what people might be willing to pay).  The problem is that this is a "bubble", and the bottom will fall right out if enough people try to sell their coins for hard currency.  As a result, I believe that the value of the coins is completely artificial, and while a few people might convert some of these coins into hard cash for a nice profit, the majority of coin holders are going to be left out in the cold.

Second, the "cost" of performing transactions for some of these currencies is becoming prohibitively expensive.  With most transactions of real currency, its just a matter of giving someone paper currency, or running an electronic transaction that normally completes in milliseconds.  Because of the math associated with cryptocurrencies, the work to sign block chains becomes prohibitive, such that for some currencies transactions can take a lot of time -- and processors are now nearly obliged to charge what would be extortionary rates just to cover their own costs (in terms of electricity and processing power used).

The environmental impact, and monumental waste, caused by cryptocurrencies cannot be overstated.  We now have huge farms of machines running, consuming vast amounts of power, performing no useful work except to "mine" coins.  As time goes on, the amount of work needed to mine each coin grows significantly (an intentional aspect of the coin), but what this means is that we are burning large amounts of power (much of which is fossil-fuel generated!) to perform work that has no useful practical purpose.   Some might say something similar about mining precious metals or gems, but their a many many real practical applications for metals like gold, silver, and platinum, and gems like diamonds and rubies as well.

Finally, as anyone who wants to build a new PC probably realizes, the use of computing hardware, and specifically "GPUs" (graphical processing units, but which also can be used to solve many numerical problems in parallel) have increased in cost dramatically -- consumer grade GPUs are generally only available today for about 2x-3x their MSRPs.  This is because the "miners" of cryptocurrencies have snapped up every available GPU.  The upshot of this is that the supply of this hardware has become prohibitive for hobbyists and professionals alike.  Indeed, much of this hardware would be far far better used in HPC arenas where it could be used to solve real-world problems, like genomic research towards finding a cure for cancer, or protein folding, or any number of other interesting and useful problems which solving would benefit mankind as a whole.  It would not surprise me if a number of new HPC projects have been canceled or put on hold simply because the supply of suitable GPU hardware has been exhausted, and putting some of those projects out of budget reach.

Eventually, when the bottom does fall out of those cryptocurrencies, all that GPU hardware will probably wind up filling land-fills, as many people won't want to buy used GPUs, which may (or may not) have had their lifespans shortened.  (One hopes that at least the eWaste these cause will be recycled, but we know that much eWaste winds up in landfills in third world countries.)

Crypto-curency mining is probably one of the most self-serving and irresponsible (to humanity and our environment) activities one can take today, while still staying in the confines of the law (except in a few jurisdictions which have sensibly outlawed cryptocurrencies.)

It's my firm belief that the world would be far better off if crypto-currencies had never been invented.


Garrett D'Amore said…
Looking at this even further, the situation is getting worse.

The cryptocurrency miners are gobbling up not just GPUs, but *power*. This has now reached the point where in some places it affects the power bills of ordinary citizens.

Second, the waste is incredibly harmful to the environment. If you believe in global warming, and you deal in cryptocurrencies, then you are nothing but a hypocrite.

Third, look at who is most likely be served by cryptocurrencies. Its not folks doing useful work. It's folks who are either involved in speculation, mining coins themselves, or have some other (typically *nefarious*) reason that using ordinary money won't work for them.

Cryptocurrencies are most often promulgated by hacking groups, sex and drug traffickers, and other people who want to evade law enforcement. Are these folks you want to support?

It's time for everyone to boycott these false currencies.
Unknown said…
'If you believe in global warming, and you deal in cryptocurrencies, then you are nothing but a hypocrite.'

Complicit yes, hypocritical no. I "believe" in global warming and I own various coins. I'm not a hypocrite though. For that to be the case I would have to criticise the use of proof of work based crypto currencies on the basis of wasting energy AND continue to mine / buy crypto.
Garrett D'Amore said…
I think if you criticize any "wasteful" activity, on the basis of exacerbating global warming, then yes, you are a hypocrite.

If you are just silent and complicit, then you're just being a selfish arse. So terminology aside, I'm not sure that's exactly better.

I keep hoping that the bottom will fall out of these currencies so that the world can go back to being slightly less insane. Folks who are willing to trade in these currencies are the worst kind of speculators -- the speculation here is strictly for personal gain, without any chance that any of it ties back to useful work or products, and an excellent chance of simply helping to prop up the finances of folks who are engaged in some very shady dealing (why else use bitcoin? its less convenient and more expensive to perform transactions in it -- it's sole value is in being anonymous.)

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