LettersWhy cryptocurrencies will not be widely used any time soon

Name: Chinese police seize 4,000 bitcoin-mining computers that illegally tapped US$3 million worth of electricity
Uploaded: 2021-05-16T16:30:10.000Z
Duration: 1 min 7 s
Description: Chinese police seize 4,000 bitcoin-mining computers that illegally tapped US$3 million worth of electricity

Virtual currencies can be hacked. The nature of decentralisation makes your virtual currency both safe and unsafe

While cryptocurrencies cannot be controlled by any organisation, their value can still be affected

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Industrial fans operate to cool mining rigs at the CryptoUniverse cryptocurrency mining farm in Nadvoitsy, Russia. Some people see mining virtual currencies as just another way to increase passive income but they may end up investing too much, including in mining equipment. Photo: Bloomberg

Letters

Published: 12:30am, 17 May 2021Updated: 12:30am, 17 May 2021

These days, we often hear about virtual currencies or cryptocurrencies, such as bitcoin, Ether, Dogecoin and Litecoin. This year, the value of some of these currencies increased substantially, leading some people, including a friend of mine, to start mining them.

Apart from their rising value, virtual currencies are attractive because of the way they are produced. Some people see mining virtual currencies as a relatively easy and low-cost option. All you need to do is turn on the mining programme and wait. Some even purchase extra devices to increase efficiency. However, while the activity may be low cost from a human resources perspective, it is time consuming.

Many people see mining virtual currencies as just another way to increase passive income but they may end up investing too much, including in mining equipment, or having relatively low expectations. However, they ought to remember that this is a high-risk investment.

First, virtual currencies can be hacked. The nature of decentralisation makes your virtual currency both safe and unsafe. Once you lose your virtual currency, you will not get it back because it is not under any organisation’s or institution’s protection.

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Chinese police seize 4,000 bitcoin-mining computers that illegally tapped US$3 million worth of electricity

Second, although decentralisation means that virtual currencies cannot be controlled by any organisation, their value can still be affected. For example, in April, bitcoin’s value fell sharply when Turkey banned crypto payments.