| A representation of the virtual currency bitcoin is seen on a motherboard in this picture illustration taken April 24, 2020. Reuters |
By Scott Shepherd
The cryptocurrency craze has its risks. The news is full of stories about people who locked themselves out of their bitcoin wallets or otherwise forgot their passwords and lost access to millions of dollars' worth of cryptocurrency. I hope it's not just me who has a sick fascination in these kind of stories ― my heart goes out to these people, but I also sort of revel in the second-hand agony.
My favorite and most agonizing is the story of a Welsh man who threw his hard drive containing 7,500 bitcoins ― now worth an unbelievable fortune ― away in 2013. He's begged the local council to let him hire a team to search for the hard drive. In the fashion of every local governments everywhere, the council is stubbornly refusing to let him, even after he promised them a quarter of the bitcoins. The BBC captions its video about the palaver rather euphemistically: "James Howells says he wishes he had never thrown away the hard drive".
I didn't listen to the guy who told me to buy a bitcoin, by the way. In a moment of weakness recently I let myself imagine if I had bought loads of bitcoins in 2015 and sold them now. My poor brain can't figure out what percentage profit I could have made, but it's certainly a lot. And of course, the further back in the past you go, the cheaper bitcoin was.
Sometimes hindsight really makes things worse. It would certainly be easy for us all to kick ourselves for not getting in on crypto while it was cheap. Imagine if you had spent a few thousand dollars on bitcoins ten years ago and then sold them in 2021. You could spend the rest of your days lying around in baths of champagne eating Ferrero Rocher or whatever it is that rich people do. In fact, if you had poured all of your earnings into bitcoin for several years and then sold them at their peak, then by now you'd probably even be able to afford to buy a small apartment on the outskirts of Seoul.
The truth is that I could never have become a bitcoin millionaire, and I think the same is true for a lot of people. For one thing, when I was advised to buy bitcoin, I was a poor postgraduate paying my own way through a PhD. I didn't have much money to waste on cryptocurrency, and even if I did have plenty of money sloshing around, I certainly wouldn't have bought bitcoin.
Even if in the unlikely event that someone had actually convinced me to buy some, there's no way I would have had the guts to hang onto it long enough to see it reach its current heights: the moment I saw that I had made a good return on the original money I put in, I would have sold it. Or, more likely, I would have lost access to all my bitcoins because I lost my password or accidentally dropped my computer or spilled coffee on it during some frantic midnight study session (those were the days).
But really, there was almost no chance of me buying bitcoin, just as there is little chance of me doing so now.
One problem I have with bitcoin is that there's no central bank or government backing it up. I know that many people see this as bitcoin's greatest strength, but it is also a fundamental problem. While politicians and bankers are hardly the world's most popular people, they do at least exist, and they can to a degree be held accountable. With bitcoin, there is no authority and no-one to blame when things go wrong, just as there is no-one to complain to when you're locked out of your digital wallet.
Then there's the very real problem of criminality: virtual currencies are perfect tools for money laundering and all kinds of digital crime.
Perhaps my biggest worry is that bitcoin uses ever-increasing quantities of electricity to power it. The Cambridge Centre for Alternative Finance estimates that the computers generating (the trendy term is "mining") and maintaining bitcoin may use roughly the same amount of electricity as Argentina or Ukraine. This is a terrible waste at a time when we're all so desperate to become greener and more eco-friendly. All our efforts seem a bit pointless if it's just offset by an electronic currency that we don't really even need.
Tesla's recent investment in bitcoin which made the price shoot up was a moment that legitimized the digital currency for many. Some banks and financial institutions have even followed him in accepting or toying with bitcoin.
Yet while we can acknowledge that Musk is an ingenious entrepreneur, he is hardly the best role-model. His behaviour has at times been unstable to say the least; and several of his Tweets have led to court cases and wrought havoc with stock prices. Those who seek to emulate him and his financial dealings do so at their own risk.
I have my doubts about cryptocurrency. Let's be honest, though: the dream of earning millions through savvy speculation is an alluring one. Yet even in a hypothetical world where I did make a huge profit on bitcoin, I'm not sure I'd be that much better off in the ways that matter most, and I really don't think I'd stop working. Don't get me wrong: being rich must have its benefits, but after a few weeks lying around on my private island eating diamond-crusted kimchi, I really think I'd just get bored. Humans are simply hardwired to work, or most are at least.
I don't know what's going to happen in the future with bitcoin and all the other cryptocurrencies out there. No-one does, not with anything approaching certainty ― and if anyone tells you they do, they're lying. I can't figure out if I'm going to risk any of my hard-earned won buying this imaginary money. Maybe one day I might risk a little bit, but I really can't decide whether it's even something I could buy in good conscience.
One thing's for sure. If you do decide to take the plunge and buy cryptocurrency, you'd better be prepared to lose all that money, because the price may well drop through the floor ― or you might accidentally throw your cryptocurrency into a landfill and not get it back. Maybe it's best just to stick to doing good old-fashioned work and earning money in a currency backed by an actual government.
Dr. Scott Shepherd is a British-American academic. He has taught in universities in the U.K. and Korea, and is currently Assistant Professor of English at Chongshin University, Seoul. The views expressed in the article are the author's own and do not reflect the editorial direction of The Korea Times.