Crypto and NFTs Are Environmental Disasters...But Do They Have to Be? - YouTube

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The ways that we live our lives online  are changing very fast. When I first 

got on the internet, no one was  predicting a world anything like the one 

we are living in today. The tools that have made that possible,  

for good and bad, are really cool and advanced and, for the most part,  

we do not understand them that well. 

Like, most of us don’t really know  what “http” means let alone what impact 

inviting billions of people into  many-to-many communication has had and 

will continue to have on society. But that does not mean we’re stopping the  

changing…or even slowing it down. 

Here’s what I’ll say to start…blockchains are  

controversial. Controversial because of how they are used,  

what they enable, and the impacts that they are having and may have on our world. 

And when something is the subject of  controversy, the expectation is that 

everyone should have an opinion.  But in this case, we at SciShow, are 

not offering an opinion. Instead, we  want to interface with a reality….these 

tools exist, they are not going to  stop existing, and they are often 

extremely energy inefficient,  but maybe they don’t need to be. 

First though, let’s define some  of what we’re talking about. 

This technology is fairly new, as far  as the whole history of digital tech is 

concerned, but is quickly  becoming more and more popular. 

Cryptocurrencies are a kind of digital  currency that’s transferred and 

tracked and authenticated by a  distributed network of users rather than 

something like a centralized bank.  The idea of a cryptocurrency is that 

each unit of the currency is interchangeable…  just like a dollar is a dollar, 

a bitcoin is a bitcoin. They’re all  identical and worth the exact same 

amount. There’s a word for  this… they are “fungible.” 

NFTs are… non-fungible tokens. They  are also just information stored 

on a ledger maintained by a distributed  network of users, but each NFT is 

different and not interchangeable.  This means you can have them contain 

information, like saying, “This token  represents ownership of this piece of 

digital art… or this token represents ownership of  

1% of the rights to a song.” 

How people use them is legally complex,  but basically they’re just notes 

on a ledger that can be marked as  being owned by a person…or wallet. 

Now the real secret sauce to  both cryptocurrencies and NFTs is 

blockchain: a digital ledger that keeps  track of all the transactions made, 

and thus who owns what. Because, like, we’re all aware  

that you can easily make digital copies of something. Like if you have a movie file,  

and you send it to me, we both have the movie file. But if you  

have a dollar, and you send it to me, we don’t both have the dollar. We need a  

system to keep track of where the dollar is and prevent people  

from making infinite copies of them. This is what makes blockchains a valuable tool. 

The blockchain is a public ledger  that is stored on many many computers 

all over the world. Everyone who  mines bitcoin has the exact same copy 

of the ledger…which is the blockchain.  And the blockchain has a record of 

every single transaction of that  currency that has ever happened. As more 

transactions happen, the blockchain  keeps getting longer. Currently, the 

bitcoin blockchain is around 400  gigabytes. So, big, but maybe not as big 

as you’d think. So bitcoins are not files…they are  

notes on a file that lots of people have access to and keep track of. 

Because everyone has a copy of the  blockchain, no one can change it in 

one place without getting caught  by all of the other people. 

But also, you need to be able to  add new transactions to the ledger, 

because part of the whole point  is moving these representations of 

ownership around. And you don’t just  want anybody to be able to do it. 

If you want to go deeper on how all  of this works, our video from 2016, 

when the ledger was just 100 gigs,  is still very good and still totally 

applicable. But, basically, to add a  transaction to the ledger, you have to 

solve super complex math problems. And, if you do that…you solve the  

problem, and you add a new block of transactions to the chain. As a reward  

you get a bit of the underlying currency of the blockchain. 

This is what people are talking  about when they say they are mining 

crypto. They are maintaining the  ledger, and adding new blocks of 

transactions, and verifying those  transactions. Each block is verified by 

several users, so it’s almost impossible  to forge a transaction….but you 

don’t get to do any of that unless  you’re the one solving the super 

complex math problems. You can’t  make money mining if you don’t solve 

the problems first. So people are in  an arms race to solve these problems 

very quickly. But the math problem  

only exists to make it inherently expensive to add and verify transactions… so expensive that it is  

impossible for a bunch of hackers to work together  

to add false transactions. Since some cryptos are now  

worth a fair chunk of change, there’s more incentive for people to join the mining race. 

Enter the environmental impact. These  math problems are inherently and 

intentionally tough to solve. People  are competing with each other to 

solve them, and so there is  tremendous economic incentive to buy 

extremely expensive, state of the  art computer hardware, and use a 

tremendous amount of energy to  solve useless math problems so that 

you can be the one who adds  the blocks and makes the money. 

And depending on how that power  is generated, that means a lot of 

carbon emissions. On top of all that, mining and all this  

hardcore computing generate a lot of electronic waste. 

So the question becomes whether it’s  possible to reduce energy demand, 

waste, and overall footprint for cryptocurrencies. When it comes to crypto, miners need to have  

a lot of computing power because, the more power  

you have, the quicker you can make guesses and the more likely you are to be the one to  

solve the problem and get the cash. 

NFTs run into the same problem  because they are also often stored on 

ledgers that use this same system  and are bought and sold with 

cryptocurrencies. Now, numbers on this aren’t  

super easy to get, but they are mind boggling. Research done by the  

University of Cambridge in the UK estimated that as of November 2018  

the top six cryptocurrencies consumed between 52 and 111  

terawatt-hours of energy every year. To put that in perspective, that’s  

about the same amount of energy as the entire country of Belgium used in 2016. 

And it gets worse as the  currencies get more popular. 

When cryptocurrencies were first  coming onto the scene, there weren’t 

that many new transactions being  added to the ledger and the currencies 

weren’t worth all that much, so  the stakes weren’t super high. 

That meant the computer power and  energy needed weren’t massive. 

Most miners could probably do  it from their home computers. 

But as this tech has become more  popular, miners have needed whole 

warehouses of super-powerful  computers to outcompete other mining 

rivals. And that energy consumption keeps on growing. 

Cambridge researchers estimate that  at the time of the filming of this 

episode, Bitcoin will use more than  120 terawatt-hours this year, more 

than a 40 percent increase from last year. In 2020, The Central Bank of the  

Netherlands estimated that a single bitcoin transaction produced around 402  

kilograms of carbon emissions. That equates to about two-thirds of the  

monthly emissions of an average Dutch household. 

This is, for clarity, not comparable  to the inefficiency of any other system 

of moving money around. Then there’s the electronic  

waste from all these processes. Because miners compete against  

each other, they always need to upgrade so the physical hardware,  

like computer chips, becomes outdated really quickly. 

We’re talking obsolete in one or two  years, then it’s out with the old, in 

with the new and more powerful. That means a single Bitcoin  

transaction makes around 355 grams of electronic waste, or a little more than two  

iPhones or three-quarters of an iPad. 

So… that all seems pretty bad.  Between the massive power demand 

leading to carbon emissions and the  arms race of electronic waste, it 

seems that there is a problem here  that desperately needs to be solved. 

Luckily, just because blockchains  have been this way, that doesn’t mean 

they have to be this way. You can change the way  

blocks are added to the blockchain. The method we described earlier,  

where lots of supercomputers around the world compete to be one of the ones  

to solve the super hard problem, is called proof of work. 

The literal fact that proof of work  requires so much energy is part of what 

makes it secure. You have to prove  that you did a lot of work in order to 

add a transaction block to the chain.  If you didn’t have to do all that work, 

anyone could add blocks to the chain  more easily, and lots of people 

would do it, and hackers could mess things up. But there is another way to make adding  

and verifying a block hard to do. Instead of proving that you did work,  

you prove that you have some of the currency. You put some skin in  

the game… some collateral. You prove that you have a stake in the project. So  

instead of proof of work, this is proof of stake. 

Instead of a free for all competition,  proof of stake means miners have to 

buy into a lottery for the chance to  be one of the users to create or check 

a block of transactions Each miner puts up their own  

amount of cryptocurrency and then only a few of the miners, instead of thousands,  

are selected, at random, to solve the math problem. 

And instead of competing against one  another, the block is only validated 

once all the selected miners  have solved the math problem. 

This means a miner can’t gain  an advantage by adding another 

supercomputer to their setup.  The arms race will de-escalate. 

Proof of stake should cut energy use,  the carbon emissions that go with 

it, and cut down on e-waste since  those computers shouldn’t have to work 

as hard. Hardware that would be  entirely obsolete for proof of work, can 

be used much longer for proof of stake. And this isn’t hypothetical.  

Solana and Cardano are fairly large cryptocurrencies that use proof of stake.  

They each have total market value of around $30 billion. 

And one of the most popular  cryptocurrencies, Ethereum, has proposed 

to make the switch to this method in  the second quarter of 2022. But this 

is a complex technical challenge and  also a complex cultural challenge, 

as many Etherium miners have invested  a lot of money in systems that 

will no longer be as valuable. But it  looks like it’s definitely going to 

happen. Though, of course this  is software, and everyone knows 

launches can be delayed. Experts are estimating that this shift  

could cut Ethereum’s energy use by 99.95%. 

Bitcoin, on the other hand, will likely  never change from proof of work and 

so, as long as it exists and thrives,  will remain a massive consumer of 

electricity. Miners could attempt to use  

more renewable energy, or only use energy that is produced during times when  

there is excess energy. But, ultimately, that will be up to  

individual miners and will be very difficult to track. Regardless, nearly all of the energy used  

for Bitcoin could be being used for something else. 

So while some cryptocurrencies are  already solving this problem, Bitcoin 

will likely chug along consuming  huge amounts of power every time 

someone makes a transaction. Like we said up top, we know this  

stuff is controversial and people have strong perspectives. Please  

be respectful in the comments. No one knows where the future is taking us,  

but we can all be fairly certain that cryptocurrencies aren’t going  

anywhere anytime soon, and also we can agree that putting less carbon dioxide into  

the atmosphere would be good. 

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