My understanding of finance is fairly basic. In order to function in society you need to work to earn money, which you can then spend or save for a rainy day. Your money can be in a bank, in investments, or under the matress. Banks are there, backed up by collateral, to keep your money safe, accessible & earning interest. Investments may do well & earn you profit, or badly & you lose money.
Modern finance is way beyond my understanding. Since we sold off half our gold reserves between 1999 - 2002 at the lowest gold price in 20 years, we no longer have as much actual wealth to underpin banking. Stability is crucial for national economies, as gold helps preserve wealth and purchasing power when other assets may lose value. In addition, these gold reserves act as a safety net for Central Banks and help ensure they meet their obligations during times of financial crisis.
Quantitative easing, where banks purchase financial assets, and essentially increase the cash flow in the economy, literally seems to me like printing monopoly money. But what do I know? It can lead to asset inflation, wealth inequality, and potential for long-term instability. It can also lead to distortions in the housing market, devaluation of currency, and difficulties in reversing the policy.
Crypto currency is way beyond my skill set. Crypto exists digitally or virtually and uses cryptography to secure transactions. Crypto currencies don't have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units. This is a public ledger called blockchain, a record of all transactions updated and held by currency holders. Bitcoin came first in 2009. Now there are thousands of crypto currencies. To me that is "mumbo jumbo". Individual cryptocurrency projects or platforms, but seemingly not all, can be fraudulent and resemble Ponzi schemes. Some cryptocurrency projects, particularly Initial Coin Offerings (ICOs), have been falsely marketed as investments offering high returns with little risk, resembling Ponzi schemes. Warren Buffett called the digital currency Bitcoin “probably rat poison squared.”
Having said all of that, my major beef is that, along with Streaming & AI, Crypto is really bad for the environment. Each bitcoin transaction generates carbon emissions roughly equivalent to driving a gasoline-powered car between 1,600 and 2,600 kilometres.Crypto high energy use often leads to increased greenhouse gas emissions, contributing to climate change. In 2018 the level of emissions produced by Bitcoin sat between the levels produced by the nations of Bolivia and Portugal combined. Crypto's complex Proof of Work (PoW) process, requires substantial computational power. If electricity fails blockchains would be unable to verify transactions.
Basically, we are not Lemmings running over the cliff. We are human beings on the road to perdition & self destruction.
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