What is cryptocurrency?
Cryptocurrency is digital money. It is made of two words. Crypto, which means to keep something protected, and currency, which can be used to buy things. This isn’t like cash or coins that you can touch, but it can be used to buy things on the internet.
The first cryptocurrency was called Bitcoin (launched in 2009). It is still used the most. Regular money is printed and controlled by the government, but cryptocurrency is created and traded on the Internet. Many countries (e.g. China, Egypt, Bangladesh, etc.) have banned cryptocurrencies because they are outside government control.
Anyone can make bitcoins. They use a technology called a blockchain. A blockchain is a chain of blocks. Every block has some information in it. To add another block to the blockchain, you have to enter a secret code. To get this secret code, people have to solve a very difficult mathematical puzzle. The first person who solves this puzzle gets some bitcoins as a prize!
If all this is digital, why is the environment getting affected?
Mining cryptocurrency needs lots of electricity and fossil fuels. To earn bitcoins, you solve tricky math puzzles with a super-fast computer that uses a lot of electricity.
People all over the world mine lots of Bitcoin, using tons of electricity, mainly generated from fossil fuels. Using so much electricity releases harmful gases into the air and causes global warming. This hurts our efforts to stop climate change.
Electricity is a valuable resource. Many poor countries cannot produce enough electricity for their people. People believe that this extra electricity could be shared with them.
Are we protecting ourselves from resource-hungry cryptocurrencies?
Many people were worried about cryptocurrencies harming the environment. So, they made eco-friendly cryptocurrencies like Nano and Chia. They are made using less electricity. So now, we can use cryptocurrencies without hurting the environment.
