Knowing the Unknown Advantages of Bitcoin Mining Many Cryptocurrency Haters Don’t Know Yet
The Unknown Advantages Of Bitcoin Mining
Often, Bitcoin mining is criticized for consuming huge amounts of electricity. In fact, some people say that the inefficient use of energy resources make the entire process uneconomical.
Nonetheless, Bitcoin mining has several benefits, some of which are not apparent.
In the past, proponents of paper money argued that using gold was uneconomical because of the expensiveness of the mining and storage of the precious metal. Roger Garrison, an American professor of Economics, however, contradicted this argument by highlighting that the fiat money system is equally as expensive. Specifically, Roger noted that:
- Various entities are fighting over the control of printing money, increasing the cost of production in the process.
- The manipulation of the fiat system through quantitative easing.
- Misusing authority leads to inflation, which causes the misappropriation of money.
- Businesses incur costs when trying to predict to conduct of the authorities who control the production of money.
The Lending Culture
Throughout the world, all businesses have the same objective – making profits.
According to Nick Szabo, the expensiveness of Bitcoin mining is beneficial, in that it controls the number of people participating in the activity. Precisely, the complexity of the process makes it less vulnerable to counterfeiting, inflation and stealing. Most importantly, there is no room for debts in the Bitcoin protocol.
Contrariwise, the fiat system is characterized by lending, leading to the accumulation of debts. Every time a government desires to fund a project, even if it is not a priority, they can easily access loans. To repay these loans, the governments impose unfriendly tax regimes on their citizens, resulting in the inflation of the prices of commodities.
Obviously, Bitcoin has numerous advantages over the fiat system despite the expensiveness of its mining. This is because:
- It cannot be manipulated by the government.
- It is the solution to fractional reserve banking, a practice that creates a vicious cycle of debts.
- It is immune to inflation.
Therefore, when anybody argues that Bitcoin managing is harmful, they should have a look at the advantages mentioned above. According to Garrison, compromises are inevitable.