Tag: Banking

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Banking uses 56 times more energy than Bitcoin

Analysis of Bitcoin’s proof-of-work and the Lightning Network exposes the banking system as energy-hungry, demonstrating that Bitcoin is better for the planet.

To download the report 👇

Bitcoin: Cryptopayments Energy Efficiency
Bitcoin introduced a cryptographic peer-to-peer version of money that allows online payments to be sent directly from one party to another without going through
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https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID4125499_code5204338.pdf

https://cointelegraph-com.cdn.ampproject.org/c/s/cointelegraph.com/news/banking-uses-56-times-more-energy-than-bitcoin-valuechain-report


June 16, 2022 by Joseph Hall


Fresh figures on Bitcoin’s (BTC) energy consumption, efficiency and scalability serve to expose the banking sector while bathing the world’s largest cryptocurrency in a new light.


A research report published by Michel Khazzaka, an IT engineer, cryptographer and consultant, calculates that Bitcoin payments are a “million times more efficient” than the legacy financial system. Plus, the banking sector “uses 56 times more energy than Bitcoin.”


The report compiles almost four years of research and suggests a new calculation for estimating Bitcoin’s proof-of-work energy consumption. In an interview, Khazzaka told Cointelegraph:


“Bitcoin Lightning, and Bitcoin, in general, are really great and very efficient technological solutions that deserve to be adopted on a large scale. This invention is brilliant enough, efficient enough, and powerful enough to get mass adoption.”


Khazzaka, who founded payments consultancy Valuechain in late 2021, proposes an alternative to the energy estimates provided by Cambridge Bitcoin Electricity Consumption Index (CBECI). The index, often cited by Cointelegraph, estimates that Bitcoin consumes roughly 122 TW/H per year.


Taking into account the average lifespan of Bitcoin mining machines as well as the rate at which new IT materials are created, Khazzaka suggests that Bitcoin consumes 88.95 TWh per year, considerably less than Cambridge’s estimate.


Graph to show total count of mining units over time over 160 months. Source: Khazzaka report
A payments specialist who wrote his dissertation about cryptography in 2003, and discovered Bitcoin in 2011, Khazzaka also puts the banking sector under the microscope to effectively compare the two monetary systems. Khazzaka told Cointelegraph he “really underestimates every aspect of the banking sector,” and contrary to critics, his report is “biased to the banking system.”


Nonetheless, taking into account the creation of money, transporting money, physical banking infrastructure energy consumption, etc, he arrives at a figure of 4,981 TWh. Rounded up, 5,000 TWh is consumed by the “classical payments” sector every year. Consequently, banking uses 56 times more energy than Bitcoin.


The report examines transaction efficiency revealing that currently, “at current block size and if the blocks are filled to their maximum capacity ηmax = 5.7× better energy efficiency than the classical system.” However, that’s without taking into account the Lightning Network. In the interview, Khazzaka explained:


“Lightning will allow the bitcoin protocol to do more transactions without consuming more energy. And this is magic.”


The report concludes that the combination of Bitcoin and the Lightning Network allows Bitcoin to become “194 million” times more energy efficient than a classical payment system.


For Khazzaka, the report lays bare that the “Banking and payments industry needs to adopt blockchain and maybe even Bitcoin.” While Khazzaka’s conclusion may come as a surprise to the cypherpunks and anarchocapitalists who favor the crypto space, Khazzaka believes that Bitcoin could actually benefit banking:


Although Bitcoin’s energy use is frequently critiqued, the investigation into the banking sector will come as welcome news to many.

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Lebanon’s banking sector is dead but Digital wallets, and digital currencies are coming to Life

Original post by: Lara Abdul Malak

Whether the Lebanese want to or don’t want to believe it, whether the Lebanese government and banking sector want to accept it or not, the Lebanese banking industry is dead. No amount of capital raises, no amount of restructuring can bring back the lost trust. Trust is the basis of all activities in society, economy, finance and most importantly politics, and trust is lost in the banking sector for not only the old generations, the current but also future, the youth.

In the 1990s Lebanon was the first country in the region to have cellular or what we call a mobile network, the reason being that the entire landline infrastructure was outdated or destroyed during the war. Lebanon was the first in the Arab region not because they wanted to be the first but because they had no choice but to be the first to jump into the bandwagon of the latest technology, the era of mobility and later on the era of  internet.

Today we are at the same cross road. After the fall of the Lebanese banking sector due to their irresponsible lending to the Lebanese corrupt state and government, the Lebanese not only lost their life savings but today have lost whatever was left of their purchasing power in Lebanese Lira.  

While in some countries this would still be survivable because they have products and services or manufacturing industries that they themselves own, in Lebanon everything is dependent on raw material, or products from outside, making the economic and social tragedy a 100 times worse.

But maybe the Lebanese have a solution, a chance to not only free themselves from the expiration of the banking sector, the corruption of the state and its political regime but also a chance to help each other in a way like never before.

The answer is in digital currencies. It doesn’t have to be a crypto currency like Bitcoin or Ethereum it could just be a stablecoin like USDC, Tether , Japanese Yen (JPY) , or china’s upcoming digital currency stored in each person’s digital wallet, or with a crypto asset custodian.

So what would that mean for Lebanese and their economy, first and foremost if your money is stored digitally in your pocket, and securely then you could make payments from one digital wallet to another no matter where that other digital wallet was in the world. This would be a savior not only for individuals but also businesses, manufacturers and traders in Lebanon who need to pay for goods and raw material but need to traditionally go through a bank to do it. This is called Peer to peer payments and most of them are carried out on Blockchain public networks. One such company that is doing this for the Lebanese is Fluus.me

Companies such as Global Digital Money for example are even allowing people to hold digital currencies, crypto not only in a digital wallet but in a regular card and giving them the ability to make all payments using those cards at Point of Sales or ATMs within a country or from one country to another.

It would also mean that Lebanese could actually lend money as well, in what is now known as peer to peer lending. So instead of depending on a corrupt government and irresponsible banking sector to lend money to businesses and projects that need  funding to grow, expand or operate, or lending money to people who want to buy a house or car. Lebanese could lend to each other using smart contracts on the blockchain with agreed upon interest rates and terms.

Even more so, Lebanese expats who usually send money to their families as remittances wouldn’t even have to worry about using a bank or traditional money payment service provider, they could use blockchain enabled remittance providers like Telcoin , Cwallet,  Cashaa, or others.

The Lebanese and international community could even carry out a crowd funding campaigns, on crowd funding platforms or even deal making platforms to build an electrical plant utilizing stablecoins to pay for tokenized shares in this plant and take profits all put into their digital wallets in a transparent, secure, and efficient way.

While the central Bank of Lebanon showed shallow interest in launching a Lebanese digital currency for usage inside Lebanon, or launching the lending trade finance platform for Lebanese industrial sector, nothing happened because nothing ever does. Maybe it would have been better to use Banqu or others already in the space.

These digial currencies, wouldnt need traditional exchanges but Lebanese could use digital and crypto exchanges of which many of them are now being regulated in the region such as CoinMENA, Matrix, RAIN, and many others. 

In the final analysis, while death is scary to accept, and what is new is usually even scarier to embrace, the Lebanese need to start to understand that there are solutions out there in the digital age that weren’t available before, and they need to start embracing these new digital forms of money and the freedom as well as responsibility it brings.

The death of the banking sector is inevitable across the globe at some point in the future, and while it has started already in Lebanon this could be seen as an opportunity.. Lebanon and Lebanese have always been the first to embrace opportunities so don’t stop now.