Hello readers; I hope that you have all had an excellent weekend and that the new week has started well. Either way, let me gild your Monday further with this week’s edition of News, Views and Truths.
We return, once again, to the gift that keeps on giving. Cryptocurrencies.
Last week, we saw a crash in cryptocurrencies, with Bitcoin alone falling more than 50% from its all-time high due to the euphoria surrounding the digital currency, as investors fear that the concept is not quite all it’s cracked up to be.
And to highlight this volatility we can use the emotional state of crypto investors. There is, in fact, an index suitably named the “Crypto Fear and Greed Index” where a value of 0 means “extreme fear” and a value of 100 represents “extreme greed.” The index, after hitting 90 this year, fell to 10 as of today.
While many veteran crypto investors are seeing this volatility as a healthy rebalancing which is needed for the “asset” to move higher over the longer term, the headwinds to growth are building.
Environmental groups across the globe are lining up to disable the ability to accept donations with Bitcoin until the original cryptocurrency cleans up its act. In the coming week, Greenpeace USA is expected to officially announce it will no longer accept charitable donations in Bitcoin. The UK arm of the world’s most recognisable environmental group is expected to follow suit, as are the rest of its branches across the world.
Greenpeace was one of the early adopters of crypto in 2014, while much of the world had still not even heard of decentralised finance. The environmental charity created a facility to make donations using Bitcoin and regularly promoted its policy of onboarding the digital community.
However, the group has said that as the amount of energy needed to run Bitcoin became clearer, the policy became no longer tenable. It is also understood that Friends of the Earth will be making a similar announcement by June, with several other high-profile organisations expected to withdraw the facility to donate Bitcoin in the coming weeks.
The trigger for all of this was, unsurprisingly, Elon Musk, owner of Tesla. He stated, “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.” To put this cost into perspective, the globally acknowledged estimate is that crypto mining annually matches the electricity output of Sweden, which is around half of the consumption of the UK’s yearly electricity needs.
And so, volatility continues unabated in the world of digital currencies. But remember kids, volatility and risk are two different things.
So let me introduce to you the risk in cryptos.
DeFi100 is a cryptocurrency, joining the market in November 2020. This is the message on the front page of DeFi100.org website.
I’ve deleted the naughty word used in the message, but I’m sure you can understand the inference. It is thought that the stolen haul amounts to around $32m and, as crypto transactions are anonymous on the way in, they are anonymous on the way out.
That, ladies and gentlemen, is risk.