Author: Scott Doudera, Information Technology Page 1 of 4

A Future for Green Currency

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Every time I turn on the news, I hear something about the shift toward clean energy. Electric cars, solar panels, recycling. When a friend or investor asks me about cryptocurrency, I consider its carbon footprint on our planet as criteria. Not because I am an environmental fanatic, I still drive an affordable, non-electric, gasoline powered car. The top reason I don’t own any Bitcoin is due to its load on the power grids, followed closely by its inefficiency in transaction speed and price volatility. Bitcoin consumes more energy than many of the world’s leading countries. “But don’t you want to hedge your portfolio against rising inflation?”  Yes, I do, but in a way that also makes me a good steward of the resources on our planet.

What’s the impact?

According to the most recent estimates from the Bitcoin Energy Consumption Index, a data project headed by Dutch economists, a single transaction of the world’s most popular cryptocurrency uses about 2,157 kilowatt-hours of energy.  So, to purchase a new video game for the kids, one would have to burn enough energy to power one household for about 74 days to send the funds, and have the transaction verified on the network.

“How about Ethereum, that’s a greener cryptocurrency.”   Barely…  Ethereum consumes more energy than Switzerland (63.3 TWh annually) and Israel combined (60.5 TWh annually).

Greener pastures:

There are several cryptocurrencies that offer a smaller load on the power grid. A few examples in alphabetic order are:

Algorand

In 2021, Algorand declared its blockchain to be completely carbon neutral. This currency has a partnership with Climate Trade, an organization dedicated to helping companies improve their sustainability profiles.

BitGreen

BitGreen was created as a response to Bitcoin, considering the environmental impact it has. It is a 100% community-run project and uses an energy-efficient proof-of-work algorithm. The company was founded in 2017 and has created a non-profit organization to oversee and manage the BitGreen project.

Cardano

Cardano is inherently more energy-efficient than Bitcoin as it uses a consensus mechanism where those participating in the currency buy tokens to join the network. This helps save a staggering amount of energy, and it is reported to only consume 6 GWh of power.

DEVVIO

According to DEVVIO founders, the DEVVIO network uses one-millionth of the energy usage of Bitcoin and generates far less in terms of greenhouse gasses. It was designed specifically to reduce energy expenditure and be a ‘greener’ cryptocurrency.

Nano

Nano uses block-lattice technology, which is energy efficient. It is still reliant on a Proof of Work mechanism, but the block-lattice goes beyond blockchain to create an account chain for each user on the network.

SolarCoin

SolarCoin is a decentralized and global cryptocurrency that strives to be self-sustainable. This cryptocurrency aims to create 1 SolarCoin for every Megawatt hour generated from solar technology.

Stellar

Stellar offers a faster and cost-effective mode of transaction and is considered a strong alternative for transaction applications like PayPal. Stellar is environment-friendly and uses a consensus protocol, which may be even better than the proof-of-stake algorithm.

“Proof of Work” vs “Proof of Stake”

Within the Green Crypto alternatives, you hear Proof of Work and Proof of Stake mentioned. Most crypto networks are run as Proof of Work, even the greener currencies. Ethereum is currently operating on a proof-of-work blockchain that requires power and resource-hungry mining hardware similar to Bitcoin. Governments and environmentalists have targeted this in their latest attempts to crack down on crypto, which is why a switch to proof-of-stake couldn’t come at a better time for Ethereum. Instead of using energy-consuming graphic cards to crunch numbers to validate blocks, ETH holders stake their tokens in a smart contract to validate new blocks on the chain. This drops the network’s power demands significantly, keeping the environmental regulators at bay. If the minds behind Ethereum can lower power consumption by 99.95% with the introduction of the Proof of Stake (PoS) paradigm instead of Proof of Work (PoW) energy hog, I would feel more enticed to be a responsible buyer.

So why not just switch Bitcoin from Proof of Work, to Proof of Stake?

Several climate activist groups including Greenpeace and billionaire Chris Larsen have launched a Bitcoin campaign to do just this. “Change the Code, Not the Climate.”  It was estimated that by 2027 Bitcoin would consume as much power as Japan. Although these efforts will mostly be a combination of marketing and millions of dollars in pledging, it is unlikely that it will be enough to invoke change. Typically change involves a blockchain fork, or fundamental change in the code that drives the project. Some would favor a change for Bitcoin to become a greener blockchain, while others (most) would choose the original design. Millions of dollars have been spent on proof-of-work miners to verify the network and these would not be needed in a Proof of Stake design. Many believe proof-of-work and decentralization is more important than the impact on the power grids or environment.

What’s the future?

The future of cryptocurrency will be a currency that is efficient and green. Whether that means blockchain networks adapt the Proof of Stake design, or perhaps a global wind and solar panel network emerges. Green, renewable energy is clean with little-to-no environmental impact that contributes to global warming, the way fossil fuels, or nuclear energy adds to greenhouse gases. There is just too much demand for clean energy to keep the environment of blockchain operating as an energy hog. The future currency winners in this sector will be those that take this into account.

Spectrum is not recommending cryptocurrency to our clients or prospects. This blog is intended to give information to the “consumer” that may not be known. At Spectrum Financial, our goal remains to provide our investors with the best risk-adjusted returns possible that fits their individual suitability. We believe cryptocurrency remains a highly speculative investment, with many different layers that can affect a specific crypto coin or the whole crypto sector. This blog highlights just one factor that can affect price movements. Furthermore, this currency alternative is still highly unregulated. Our goal remains to understand the market, its sectors, and opportunities and proceed accordingly with risk-adjusted returns in mind, not to blindly expose our investors to speculative investments.

Security or Invasion: Apps and Services that spy

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Ever wonder why your computer, or smartphone just recommended a product you were just discussing with a friend the day before?  Hmmm, that’s convenient. That’s just what I was looking for, must be a weird coincident?  No, it’s the eerie product of new marketing practices. These include cross app tracking, social network sharing, product review algorithms, and behavior recognition. Is this an invasion of my privacy, or a tech advanced value added shopping experience? Is this really meant to help me, or make someone else money?

Meta aka Facebook

Meta provides its business partners tracking software they embed in apps, websites and loyalty programs. Any company that needs to do digital advertising has little choice but to feed your activities into Facebook’s database: your grocer, political views, investments, brand preferences. Behind the scenes, Facebook takes in this data and tries to match it up to your account. It sits under your name in a part of your profile your friends can’t see, but Facebook uses this information to shape your online experience.

Among the 100 most popular smartphone apps, you can find Facebook software in 61 of them, according to app research firm Sensor Tower. Facebook also has trackers in about 25 percent of websites, according to privacy software maker Ghostery.

What to do … Quit Social Media?

Well, you could quit services such as Facebook and Meta owned Instagram. Of course they’ll beg you to stay, and encourage you to just temporarily “deactivate” your account for a while. But if you do fully delete your accounts on both services, Facebook will no longer build out a profile with your activities to target ads. But if you can’t bear to be without your social media then at least change your privacy settings.

Facebook has lots of bad default security settings you should change. Such as setting your public profile from strangers (anyone) to friends. But the most important one to combat tracking is called Off-Facebook Activity. Users found the feature was monitoring their use across multiple apps and websites, including banking.

Apple

Apple is a mixed bag when it comes to privacy. Starting with Apple’s iOS 14.5, the phone now comes with the long-awaited privacy feature called App Tracking Transparency (ATT), which highlights who is tracking you on your iPhone and gives you the option to stop it. Nice work Apple. However, …

Apple unveiled a sweeping new set of software tools in August 2021 that will scan iPhones and other devices for illegal pictures and text messages with explicit content and report users suspected of storing illegal pictures on their phones to authorities.

The aggressive plan to catch child predators and pedophiles and prohibit them from utilizing Apple’s services for illegal activity pitted the tech giant against civil liberties groups and appeared to contradict some of its own long-held stances on privacy and the way the company interacts with law enforcement. It seems like a good idea to police the bad, but at what cost to the privacy of the good?

The move also raises new questions about the nature of smartphones and who really owns the computers in your pockets. The new software will perform scans on its users’ devices without their knowledge or explicit consent, and potentially put innocent users in legal jeopardy, or at the very least monitor their private affairs.

Cheap Cameras and Cloud Services

So you think you got a great deal on a $20 wireless internet camera so you can monitor your house? Why not, it has a free cloud service and a cool App. Setup instructions were in poor English, but you got it working. Now you can check on your loved ones while they sleep, cook, and watch TV. But where is that cloud service server located? Easily could be someone’s basement in another country, or even the Chinese government? Nobody is regulating these foreign cloud services. Assume everything is being monitored, recorded, and stored. I would be very careful what room I placed one of these in! Pass on purchasing the cheap Yuanyang or NetSee cameras and stick with a U.S. product and monitoring service such as Ring or FLIR.

Google Alexa

Always listening … Best to assume everything you say is being monitored somewhere. In fact it’s being recorded when you say “Alexa”. After the wake word, the audio gets uploaded to Amazon’s cloud where they have algorithms that analyze it. According to Bloomberg’s reporting, there are at least 100 transcripts of conversations uploaded to the cloud each day that Alexas have recorded without being purposely activated. Guess I’ll be on my best behavior when there’s an Alexa in the room. Occasionally she asks, “by the way, do you want me to …. ” If you’re like me, and you don’t like this, go to the Alexa App, settings, and toggle off Hunches. I prefer when Alexa does not try to take over the conversation going on in my kitchen. And no, I don’t need another reminder to reorder protein drinks for my son.

Summary

We should realize companies that offer free products and services need to be compensated. Whether that is by generating product recommendations and revenue from you through online commerce or selling and sharing your data to another vender. Nothing in life is free. Be wary of your digital footprint because it can easily be tracked. Protecting your identity should outweigh convenience or your social media. Sometimes it’s better to stay anonymous.

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Spectrum Financial, Inc 2021