Why You Should Consider Crypto’s Potential, Plus The Crimes And Carbon Footprint Involved

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The nascent crypto ecosystem in the United States remains unregulated, which poses some serious risks to crypto traders… and, apparently, the planet. While 2021 was a fairly popular year for crypto, there is a lot that investors should care about.

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It is no secret that the world of cryptocurrencies is volatile. This week, for example, top coins like Bitcoin and Ethereum, as well as the popular meme token Dogecoin, huge fall, The decline came on the heels of minutes from a Federal Reserve meeting suggesting that its COVID crisis-induced monetary policy could be coming to an end soon. And, when the Central Bank announced this acceleration of its slimming plan, it took a toll on crypto.

But every investor knows very well that where there is risk, there is also potential for reward. That’s why crypto traders don’t shy away from all the market volatility.

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After bitcoin rises to one All-time high of $68,000 in November 2021, there was a potential glimmer in the eyes of traders hedging against continued inflation concerns. Even if cryptocurrencies have seen their fair share of volatility (including some pretty ugly plummets over the past year), traders are hopeful that as more businesses adopt these coins as a legitimate payment option. Will start Some retailers are already accepting crypto and in 2021, companies ranging from AMC Theaters to office-sharing firm WeWork came on board.

In 2022, many businesses plan to pay workers in crypto as part of a wider benefits package.

So it’s no surprise that the crypto-craze and crypto-curious aren’t giving up on the first fear of loss. But it is important to understand that volatility is not the only vehicle of risk for traders.

According to the annual, scammers made a record $14 billion in cryptocurrency in all corners of the world, and crypto theft increased 516 percent from 2020 to the equivalent of $3.2 billion. crypto crime report By Chainalysis, a blockchain analytics firm.

Overall, losses from cryptocurrency crimes increased by 79 percent from 2020, the release claims. Of the stolen funds, 72 percent were sourced from decentralized finance (DeFi) platforms.

DeFi is an emerging segment of the market that seeks to remove middlemen (read: banks) from financial transactions. Instead, DeFi leverages program code on a public blockchain, called smart contracts. And this contract is executed under specific conditions.

According to a Chainalysis report, there was a 912 percent increase in DeFi transaction volume in 2021. But hackers can take advantage of loopholes and vulnerabilities in the code; That’s what they do. And as trading platforms are being pushed into the App Store, with increasing hype about potentially promising gains, people are eagerly dumping money in unsafe places. Many fear the loss of a potential opportunity rather than the potential guilt-induced harm.

“DeFi is one of the most exciting areas of the broader cryptocurrency ecosystem, providing opportunities for entrepreneurs and cryptocurrency users alike,” Chainalysis said in its report. “But DeFi is unlikely to realize its full potential if the same decentralization that makes it so dynamic allows widespread scams and thefts.”

However, the good news is that the growth of crypto crime is relatively small compared to the growth of legitimate crypto trading. According to the report, crypto transactions using illegal addresses made up a record low of just .15 percent (down 75 percent from 2020 and about 96 percent from 2019) of $15.8 trillion in trade volume last year. In fact, overall transaction volume grew by more than 550 percent in 2021.

“The fact that the increase was just 79 percent – ​​almost an order of magnitude compared to overall adoption – may be the biggest surprise of all,” writes the Chainalysis report. “Crime is becoming a smaller and smaller part of the cryptocurrency ecosystem.”

The decline in crime is largely thanks to the inherently transparent nature of blockchain technologies and innovation in the aforementioned trading platforms that are cropping up left and right. And so, as with all investments and trades, it is up to the investors to decide how much risk—if any—they are willing to take.

For those who choose to participate in a potentially lucrative space, however, it is also worth being aware of crypto’s carbon footprint.

House Subcommittee on Inspection and Investigation Reportedly planning the first congressional hearing on the environmental impact of bitcoin, More specifically, it will look at the carbon footprint of proof-of-work crypto mining. (The proof of work model refers to a consensus mechanism that records crypto transactions.) A list of witnesses who can testify by the end of the month is reportedly already in the works.

This is just one more step in mitigating the devastation caused by cryptocurrencies. In October 2021, 70 activist groups came together to write joint letter to congress, requesting that the country take action to reduce the contribution of crypto to climate change.

After all, the growth of crypto mining in the United States has made the country the most guilty contributor to bitcoin’s global hashrate – especially following China’s crackdown on the operation – according to data from Cambridge Center for Alternative Finance,

Whether you are a fanatic or a skeptic, it is important to consider the full story of crypto as well as its value to both people and the planet. And as crypto becomes more mainstream, this information will ideally become even more transparent and understandable to the average retail investor.

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