Since its debut in 2009, Bitcoin and other cryptocurrencies have seen explosive growth and some dramatic downturns.
Cryptocurrencies now inhabit an increasingly prominent niche in the global financial landscape, offering “pastime” opportunities for young investors, channelling donations to Ukraine’s war effort or simply providing cheaper and faster alternatives to mainstream banking.
In Aotearoa New Zealand, the Reserve Bank recently decided to investigate crypto as part of a wider conversation about how New Zealanders will pay and save in the future.
So far, crypto has benefited from light regulation in New Zealand, but it’s essential we have a clear picture of all pros and cons, including the risk of criminal behaviour and climate change impacts.
Cryptocurrencies offer a variety of investment and transaction benefits, but concerns about dangers are also growing. Crypto’s volatile track record presents significant risk to investors (alongside significant reward) and the relative anonymity of Bitcoin, Ethereum and others is proving attractive to organised crime, money laundering and tax evasion.
Read more: Crypto theft is on the rise. Here's how the crimes are committed, and how you can protect yourself
To date, crypto has largely avoided the traditional forms of financial regulation banks face and it has capitalised on its ability to eschew territorial borders, being everywhere and nowhere at once.
As calls for effective regulation get louder and major markets in the US, EU and Asia seek to subject crypto to greater oversight, it is particularly important to highlight crypto’s growing but often hidden environmental impact.
Bitcoin uses more energy than most countries
How do companies with only virtual assets contribute to environmental damage? The answer is data mining.
Cryptocurrencies and assets use blockchain technology. In essence, transactions are verified and recorded on a blockchain, a public digital ledger that contains information about all transactions.
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