The many benefits of cryptocurrency and blockchain include financial inclusion, cross-border transaction efficiency, and decentralization. These perks reflect the sector’s evolution from its unknown status several years ago to its current position as a global financial tool widely used across various industries.

Cryptocurrencies are applied in industries outside of finance. For instance, stakeholders in the supply chain industry use digital assets and blockchain technology to track product transportation. Crypto also appeals to casino lovers who like to play everything from Blackjack to Roulette. To make deposits, bets, and earnings easier, players can find the best online casinos accepting Bitcoin and several other cryptocurrencies like Ether (ETH) and Dogecoin (DOGE). These casinos have a huge library of games, offer fast payments, and give players impressive bonuses.

As crypto’s popularity grows, its importance and application across multiple industries is unmistakable. However, it is crucial for all stakeholders, including academia, to explore ethical questions related to digital assets and their adoption.

Environmental Effects of Cryptocurrency Mining

Cryptocurrencies using the proof-of-work (PoW) consensus mechanism, like Bitcoin, are produced through a process called mining. This process is necessary to validate transactions as well as secure the blockchain, and involves miners racing to solve complex mathematical problems.

The problem with mining is that the cost of the process is immense. Mining requires specialized and expensive hardware that may be difficult to acquire. Another issue is that these machines consume enormous amounts of power. According to the University of Cambridge’s Bitcoin Electricity Consumption Index, global Bitcoin mining consumed 121.13 terawatt-hours of power in 2023. Figures from The International Energy Agency show that the Netherlands, with over 17 million people, consumed 121.6 terawatt-hours in 2022.

The issue with crypto mining is a moral dilemma that begs the question of whether the far-reaching benefits of cryptocurrency and blockchain technology are worth the environmental damage caused by the mining process, considering existing problems with climate change.

Potential Barriers Despite Financial Inclusion

Cryptocurrencies are praised for their capacity to promote financial inclusion. Many enthusiasts believe crypto is the solution to the lack of widespread financial access faced by people in rural areas. Since most cryptocurrencies are decentralized and do not rely on government organizations or financial institutions, access is easy. Anyone with a smartphone can register a crypto account and begin using digital assets.

However, there are issues with cryptocurrencies potentially satisfying unbanked and underbanked populations worldwide. The first problem is the inherent technicality. Although anyone can own a crypto wallet, many find it difficult to grasp the concept of digital assets and blockchain technology. A 2021 YouGov survey concluded that 98% of people do not understand the basics of cryptocurrency.

In unbanked and underbanked areas, the digital literacy required to enjoy crypto-powered financial services may be lacking. In addition, extreme volatility in the value of most digital assets is detrimental to this category of people. A sudden plunge in the price of digital assets could worsen the economic situation of underbanked people.

Cryptocurrency as an Investment Tool

Many digital assets are considered impressive investment tools because of price instability. The value of a cryptocurrency can spike significantly to provide investors with large returns on their deposits. For instance, Bitcoin jumped 788% years ago, from around $7,200 in January 2020 to nearly $64,000 by April 2021. Also, between January 2020 and May 2021, Dogecoin (DOGE) climbed 29,500%, from $0.0025 to $0.74.

However, this volatility is a double-edged sword since digital assets are as likely to plunge as they are to rise. For instance, Solana (SOL) fell 95% from $258 in November 2021 to about $12 in November 2022. ETH lost 75% in the same period, crashing from $4,300 to $1,100. The dilemma here is the decision to endorse or promote cryptocurrency as an investment channel despite its highly speculative and risky nature. This is a crucial issue for academia because several universities, including Cornell and Harvard, are already offering crypto and blockchain courses.

Decentralization Risks

Decentralization is a core tenet of blockchain technology. By eliminating intermediaries, the blockchain industry allows individuals more control over their finances, and maintains autonomy away from government oversight. For crypto enthusiasts, decentralization is essential as it empowers the average user and democratizes financial processes. This is especially beneficial to people using crypto to access otherwise unavailable financial services.

Despite the many exciting perks of decentralization, there are several ethical concerns. The lack of an authority figure means that addressing problems when they arise is tricky. Unfortunately, this leads to questions about maintaining accountability and protecting users. Stakeholders and academia must decide whether or not decentralization is worth the loss of security provided by centralized processes and systems.

New governance structures like decentralized autonomous organizations (DAOs) help to reduce centralization risks by putting power in users’ hands. In general, a DAO allows members of a community to contribute directly to decision-making processes and other responsibilities. However, several blockchain projects have poor governance structures, which lead to centralization concerns. In addition, user votes are not evenly shared among members of a DAO, as some individuals with a large number of the DAO’s governance token may hold more voting power than others.

Role of Universities in Shaping Public Debate

Universities and research institutions can encourage academic discourse about crypto and blockchain, as well as the industry’s inherent risks. These discussions can help to collect varying perspectives on the subject and inspire critical thinking about crypto and its impact on finance, governance, technology, and society. Universities can also join advocacy efforts that contribute to responsible regulation and development while raising awareness about benefits and risks.