By Smiksha Singla and Charlize Alcaraz
Despite the first decentralized cryptocurrency being invented in 2009, conversations regarding the new financial phenomenon gained traction during the COVID-19 pandemic and have trickled down to students at Ryerson.
Bitcoin is particularly popular among Ryerson students who believe that cryptocurrency is the future. The coin was first mentioned in a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” which was posted in 2008 to a mailing list discussion on cryptography. The author used the pseudonym Satoshi Nakamoto, whose real identity remains a mystery to this day.
Cryptocurrency is a digital currency built on blockchain technology, says Laleh Samarbakhsh, associate professor at Ryerson’s School of Accounting and Finance. The technology allows for a new form of virtual payment without the use of an institutional third party such as banks or PayPal.
Investopedia reported that bitcoin surged 90 per cent during the pandemic. Samarbakhsh explains that the fear of another financial crisis had investors looking for accessible decentralized markets such as bitcoin. Decentralized exchanges enable investors to deal directly with each other instead of operating from within a centralized exchange.
Centralized exchanges are platforms that facilitate the buying and selling of cryptocurrency and function as intermediaries by storing and protecting funds. Coinbase is an example of a centralized exchange, as it monitors transactions and secures assets on the trader’s behalf.
Riley Lamont, a first-year creative industries student, says he first got into crypto earlier this year as he was hearing about bitcoin nonstop on Twitter.
“I had some previous background with stocks and figured I could apply some of my knowledge to this thing,” he says. “I was wrong. Crypto was a whole new world and I was instantly hooked.”
When he purchased his first bitcoin, it was valued at around $62,000 CAD in February, right before it dipped to $18,000 CAD. Lamont says his crypto portfolio currently consists of over 50 coins.
“I wish I would’ve discovered bitcoin much earlier, but I certainly believe this is just the beginning,” Lamont says, adding that he hasn’t actually held any bitcoin for a while now as he explores lesser-known crypto ecosystems.
The coin receives consistent promotion from big names in business such as Tesla, helping to bulk up its trading price. In the same month, the electric vehicle company announced that it bought $1.5 billion USD worth of bitcoin and plans to accept the digital coin as payment for its products.
There’s no stopping students from investing in bitcoin. However, Samarbakhsh says that for students, there are multiple financial factors involved that can be addressed before putting money into crypto.
“For example, managing student debt, optimizing tuition tax credit, investing in RRSP or TFSA,” she says.
Captivated by crypto, Lamont says he spends hours every day researching, experimenting and networking with others in the crypto space.
“I tend to spend most of my time searching for upcoming projects in the space and catching them before they take off,” he explains. He further elaborates that crypto depends more or less on first-mover advantage, a strategy in which someone intends to be the first to partake in a potential high-growth market.
Although owing his introduction to the crypto market to bitcoin, Lamont says that the crypto space is more than just the coin, with the potential to expand to banking, insurance, mortgages and gaming.
“The future is going to be on the blockchain, and it is up to this generation to move in the direction of decentralization,” he says.
Environmental effects of crypto
Manufacturing bitcoin and other forms of cryptocurrency require large amounts of energy according to Investopedia, as its computation systems require the extraction of fossil fuels and coal mining.
Bitcoin uses 121 terawatt-hours of electricity every year, as BBC reported, which is more than the entire country of Argentina.
In addition to energy consumption, Investopedia also reports that cryptocurrency mining also generates a significant amount of electronic waste as hardware becomes obsolete.
Digiconomist reported that the bitcoin network generates between eight to twelve thousand tons of electronic waste every year.