Bitcoin: What is it, how much is it worth, is it bad for the planet?

The cryptocurrency known as Bitcoin has become widespread around the world and is considered by many to be the future of money as we know it. Others have harsher views towards virtual currency, skeptical of its lasting value and environmental impact.

Regardless, the influence this digital currency has is undeniable and has sparked the cryptocurrency craze around the world.

But what is Bitcoin? Who created it? How is it made, how much is it worth, and what are the many problems people have with it?

Here is everything you need to know about Bitcoin.

What is Bitcoin? Who created it?

Bitcoins are seen in this illustration image (credit: REUTERS / DADO RUVIC)

Bitcoin is a fully decentralized type of digital currency, also known as a cryptocurrency. As it is decentralized, it does not have a central bank or administrator behind it. This means that it can be transferred without an intermediary such as a bank.

The coin itself is believed to have been created in 2008 by an unknown individual or group of people, referred to only by the name of Satoshi Nakamoto. It was first used in 2009.

How much is Bitcoin worth?

The value of Bitcoin has fluctuated throughout its time of use. In 2013, for example, it was valued at $ 13.30, although in early 2014 it skyrocketed to $ 770. This rise in value continued over the years, although some lows were recorded due to a variety of circumstances, such as China’s ban on the use of cryptocurrencies and a number of different hacks and thefts.

But while the nosedive was often severe, the value of Bitcoin has skyrocketed since 2020. This is for a variety of reasons, such as Zug, Switzerland announcing plans to start taking Bitcoins as payment for taxes, The Salvador votes to make Bitcoin the legal official of the nation. PayPal allows users in the United States to use Bitcoin and the US Securities and Exchange Commission allows Bitcoin futures ETFs to trade in mid-October 2021. But among the most prominent voices driving value One of the coin is Elon Musk, with the billionaire announcing plans to accept Bitcoin to buy Tesla cars.

Currently, the value of the coin itself is 1 Bitcoin, which equates to around $ 62,822.60, or NIS 195,356.93.

How are Bitcoins mined?

Bitcoins can be obtained through mining, a complicated process that involves keeping track of what is known as blockchains, a public ledger of transactions that consists of different individual blocks, which in turn hold more information. The mining process can take a long time to achieve everything you need to mine Bitcoins.

The ownership of these chains is determined by a private key, and losing that key would mean the loss of the Bitcoins themselves.

What other types of cryptocurrencies are there?

Since Bitcoin came onto the scene, other types of cryptocurrencies have appeared as well. These include Litecoin, Ethereum, and Dodgecoin. However, the idea has been considered more seriously in recent years.

Israel develops a new 'bitcoin' currency (illustrative) (credit: JPOST STAFF)Israel develops a new ‘bitcoin’ currency (illustrative) (credit: JPOST STAFF)

In June, Bank of Israel Deputy Governor Andrew Abir revealed that a pilot test of a digital shekel cryptocurrency had already been conducted, although exactly how it would work would likely be different from something like Bitcoin.

What are the advantages of Bitcoin?

In addition to not having centralization and being theoretically open to everyone who wants to start mining and get into it, a great advantage is privacy. Although transactions are public because the ledger is public, your property can be kept anonymous. As such, the trail left by such trade might not be as easily identifiable compared to traditional currencies.

What are the disadvantages?

The field of cryptocurrencies, in general, is full of criticism due to a series of scams, price volatility, use in illegal transactions such as on the Dark Web and being essentially a “bubble”, in the economic sense of the term, which could lead to a market crash when the bubble bursts.

Another separate issue with Bitcoin is not about the currency itself, but about the mining process.

Bitcoin mining is, as stated above, incredibly complex. While in theory anyone could start mining, doing so in practice is extremely difficult due to the large amount of computing power and electricity required. Bitcoin mines are often large collections of machines, all working to go through the processes necessary to successfully mine Bitcoin. As a result, the amount of energy consumed is immense. According to a 2021 estimate from the University of Cambridge, Bitcoin consumes more than 178 Terawatt-hours of energy each year. To put that in context, if Bitcoin were a nation, it would be one of the top 30 energy consumers on Earth. Essentially, it is about as much as the entire country of Argentina.

At the current rate, such “mining” of Bitcoin consumes roughly the same amount of energy annually as the Netherlands in 2019, data from the University of Cambridge and the International Energy Agency show.

Some Bitcoin proponents point out that the existing financial system with its millions of employees and computers in air-conditioned offices also consumes large amounts of energy.

And your own success has made this problem worse. Higher demand and higher prices make more miners compete to solve puzzles in the fastest time to earn coins, using increasingly powerful computers that need more power.

But energy consumption is not the only negative aspect of Bitcoin mining. All the equipment used to mine Bitcoins has created a very large carbon footprint.

This is due, in part, to the fact that the mining process often relies on fossil fuels, particularly coal.

This is especially the case in China, where the majority of Bitcoin miners are located, as they tend to use fossil fuels except in summer.

Bitcoin production is estimated to generate between 22 and 22.9 million metric tons of carbon dioxide emissions annually, or between the levels produced by Jordan and Sri Lanka, according to a 2019 study in a scientific journal. Joule found.

There are growing attempts in the crypto industry to mitigate the environmental damage of mining and the entry of large corporations into the crypto market could boost incentives to produce “green Bitcoin” using renewable energy.

Some sustainability experts say that companies could buy carbon credits to offset the impact.

And blockchain analytics firms say that it is theoretically possible to trace the source of Bitcoin, increasing the possibility that a premium will be charged for green Bitcoin. The climate change policies of governments around the world could also help.

Reuters contributed to this report.

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