EU Should Have Banned Bitcoin Long Ago

There is a case for banning crypto-currency. The reasons are numerous, but the main one is that Bitcoin and other technologies-based currencies are disconnected from the real-world economy and thus very prone to speculative activities, in fact, speculation and criminal activities are by many considered the main attraction of crypto.

“Donald Trump spoke at the Bitcoin 2024 conference in Nashville this weekend, making history as the first former U.S. president to attend the conference and make a full-throated endorsement of Bitcoin.” This type of lead-in to an article the other day in Forbes could lead us to think that oh, no, by now, Bitcoin is perfectly normalized and part of any major tech company’s ledger and it is even used as national currency in some countries. And, to the headline in Forbes: ‘President Trump Wants America To Become The World’s “Bitcoin Superpower”.’

This is completely misleading and the fact that Trump even shows interest in Bitcoin (and in electric vehicles, for that matter) just makes it even more implausible that the crypto industry is up to a normalization. Similar to when MSM announced that Trump is a new person with more calm and reason after the assassination attempt - that was bogus and it showed within a few hours.

So crypto is still a tech smokescreen and is already taking part in breaking down western society and even the environment. Let’s examine the elements of the argument one by one.

Considering a normal, sound economy with any kind of legal activities, there is no need for crypto. In many ways, crypto currencies are based on technology waiting for a problem to solve, such as the underlying blockchain which is cumbersome, energy craving and 100% evitable under all normal circumstances.

The advantages that are often argued with crypto-currencies are usually very vague but still consequential if you look at them from a societal point of view. Crypto is completely secret and can support transactions between two parties without any middleman and are thus by intention untransparent. Society and democracy by nature needs transparency to the highest extent possible. Society has structures and government organization to keep the necessary levels of security, and to allow private organizations to keep secrets in an orderly way, open for scrutiny by e.g. the courts of law, if necessary by force. Private citizens have all kinds of other possibilities for keeping private matters to themselves, like simple not sharing them.

The built in smokescreens also mean that crypto value and security of transactions cannot be protected or guaranteed by authorities. It is exclusively a matter between the two parties in the transaction, in theory. That is theory only, because in practice, crypto is stored in and exchanged by means of computers that more or less resembles bank accounts management. You may hold your bitcoin as something similar to a long string of numbers and a password in your mind or on a piece of paper, but most people chose the somewhat safer option to keep it in a bank vault-like computer service. Those can have errors, lose your bitcoin, or disappear with your crypto overnight, go bankrupt.

In terms of security, crypto is clearly underperforming in comparison with normal currency. So why would you use it? The only rational reasons would be that you have something to hide, mainly from the authorities. But crypto is by now taxed in the same way as normal money in most countries. Which automatically makes you an offender if your purpose is to hide crypto from the authorities. The conclusion is that crypto serves the only purpose of supporting criminal or grey zone activities that any serious government would want to know about or prevent from happening in the first place.

The mathematics and the computer solutions behind are intriguing and difficult to understand without some skill and experience. The fact that crypto mining can be difficult to understand for ordinary people has been used by scammers to carry out many different types of fraud that has lured people into traps and bereaved them of their money.

Crypto mining is a very messy activity that for years were run mainly by Chinese companies that moved their computer farms around to the places where electricity was cheap. Same goes for today, now it may just be anywhere with access to cheap energy, no matter how polluting it is. Texas is has such farms.

It is estimated that crypto farming may currently use 1-2 % of world electricity production on an annualized basis. For good reasons, the actual consumption is not known, so there are estimates ranging from half a percent to the up to 2 percent worst case. That is of total world consumption. Time Magazine brings an on-the-ground story about a Texan town that is brought to its knees by crypto mining. ‘We’re Living in a Nightmare:’ Inside the Health Crisis of a Texas Bitcoin Town. The ailments reported by the citizens are - hypertension, heart palpitations, chest pain, vertigo, tinnitus, migraines, panic attacks. Their impression is that the impact is caused by the high and continuous noise levels because of the cooling compressors and ventilators necessary to keep the computer servers running.

For further on the ‘invisible’ energy consumption and pollution of computer farms, the case of AI hitting the wall with much higher energy required than just ordinary social media posts: AI hits the wall my earlier post on energy and computing and why AI does have natural limits.

The same issues with energy consumption and noise pollution is seen in other places where huge datacenters of Facebook, Apple etc. are places. Those companies try to find a soft spot with cheap and abundant electric energy and an accessible heat sink, for example colder climate, cold air and/or cold water nearby. Quite a number of datacenters are placed in the Nordics for these reasons, but - it would be difficult to obtain the necessary permits for legal reasons and because the population would most likely resist any such activity. Good internet connectivity is also a requirement for most datacenters, but for crypto it is actually less, because most effort is really just doing billions of calculations, until the algorithm finds a hit.

The natural location for crypto mining is higher, colder latitude, but there must be some other reasons why Texas has become a natural location after China banned crypto mining. Most likely, less regulation.

Crypto does absolutely nothing positive for the economy, it just damages the environment and living conditions for ordinary people.

Many countries have firm restrictions on crypto, and some have banned crypto completely, most notably

• China (banned in 2021)

• Pakistan

• Saudi Arabia

• Tunisia

• Bolivia

China and others have put in place their own e-currency to get some of the benefit with transfers and payments, while maintaining full control over the currency.

El Salvador has adopted Bitcoin as legal tender since a couple of years, with mixed though unreported results. It was an idea of the new president Nayib Bukele who is a populist authoritarian and former FMLN Sandinista Marxist guerilla member.

Other countries should look at the business case and reasons why the case is strong enough to abandon crypto before it becomes too engrained in both the gangster world and the legal economy.