ALBANY, N.Y. (May 13, 2022) – It was a rough week for the global cryptocurrency market.
Amid a worldwide selloff, Bitcoin, the largest digital currency, plunged under $26,000 per coin for the first time in 16 months, while Ether, the second-largest, dropped below $2,000 per coin for the first time since June 2021. In total, more than $200 billion in crypto wealth was erased in less than 24 hours.
Bitcoin, and other crypto giants, have a history of bouncing back from crashes to reach new highs. But in such a volatile, unregulated market, investments are risky and can lead to huge financial losses.
David Banks, program director of Globalization Studies at the University at Albany, shared his thoughts on why the “cryptocurrency dream is fading fast” in an opinion piece published by The Guardian on Thursday.
“Crypto-evangelists imagine technology as a replacement for social and political institutions. But technology never replaces social and political behaviour; it merely alters the rules and norms we follow,” said Banks, a visiting professor at UAlbany’s Department of Geography and Planning.
“To see this in action, one need only look at the plummeting value of Terra Luna, a crypto token that crashed by 98% in a day, causing some investors to lose their life savings; the plunging value of Bitcoin and Ethereum; or the countless scam victims whose non-fungible tokens (NFTs) have been stolen.”
Along with investment risks and fraud risks, Banks also points to the massive amounts of energy that crypto mines consume as states and institutions have begun to treat the market as a “potentially destabilizing geopolitical force.”
“The crypto mining industry already consumes 0.55% of global energy production – about as much as a small country… Churning out inscrutable financial assets using coal-powered electrical grids is contributing to a rapidly warming planet that is already experiencing the worst droughts seen in more than 1,000 years.”
“The servers that mine crypto exist on the planet in real countries with laws, wars and resource shortages – which are governed by politicians that have real commitments and interests. With the Russian invasion of Ukraine, we are beginning to see an emerging geopolitics of crypto that looks very much like the old world of banking and finance.”
Banks is a writer and researcher currently working on a book with University of California Press about how cities in the New York Capital Region are enticed to act like social media influencers to attract capital and new residents. He holds a Ph.D. in science and technology studies.
About the University at Albany:
A comprehensive public research university, the University at Albany-SUNY offers more than 120 undergraduate majors and minors and 125 master’s, doctoral and graduate certificate programs. UAlbany is a leader among all New York State colleges and universities in such diverse fields as atmospheric and environmental sciences, business, education, public health, health sciences, criminal justice, emergency preparedness, engineering and applied sciences, informatics, public administration, social welfare and sociology, taught by an extensive roster of faculty experts. It also offers expanded academic and research opportunities for students through an affiliation with Albany Law School. With a curriculum enhanced by 600 study-abroad opportunities, UAlbany launches great careers.