With all the news about Ukraine and Russia, a Supreme Court nominee and the apparent conflicts emerging about a different Supreme Court Justice; you might have missed what happened last Wednesday. President Biden signed an executive order to examine the risks and benefits of cryptocurrencies. The focus is on 6 key areas: consumer protection, financial stability, illicit activity, US competitiveness, financial inclusion and responsible innovation. Another aspect of this order is to explore a digital version of the US dollar. This is an important step in determining the future of NFTs and the Metaverse. BlockFi was fined $50 million by the US Securities and Exchange Commission earlier this year over violating SEC laws with its retail lending product. Other crypto firms are also facing scrutiny from the SEC. China has already banned cryptocurrencies as have Algeria, Bangladesh, Qatar, Turkey, Egypt, Morocco, and yes, even Russia – more than 40 countries in all.
The reality is that just writing out a check, putting it in an envelope, placing a stamp in the upper right corner and finding a mailbox to send it just doesn’t work any more. Even when I go to pay a bill through my bank there is a disclaimer that says using the post office to deliver their checks may take 5 to 7 days – wouldn’t I rather use Zelle or Venmo? As we witness the evolution of the Metaverse there is no question that there will be some type of electronic payment system needed. One that is easy, safe and doesn’t take the energy to create like it does for Bitcoin. Bitcoin is a decentralized digital currency without a central bank or single administrator that can be transferred from user to user on the Bitcoin network without the need for intermediaries. Bitcoin’s estimated power consumption in early 2022 was 138 terawatt hours – more than the country of Norway. Digiconomist estimates that the Bitcoin network is responsible for about 114 million tons of carbon dioxide per year. Why does this cryptocurrency require so much energy? Well, it’s from the tens of thousands of computers that are used to verify transactions. It is estimated that a single Bitcoin transaction uses 2,292.5 kilowatt hours of electricity – the equivalent of powering a typical US home for 78 days. To be fair, the banking industry consumes over double that amount of energy.
For the metaverse to reach its true opportunity, we will have to figure out digital currency.