What is Bitcoin and is it an ethical investment?

Bitcoin is the talk of the town right now, mostly because it’s value has risen almost 500% in 2017 alone.   So no surprise, someone asked me the other day if at Goodments we see it as an ethical investment.

Now although we don’t pretend to be the authority on what is and isn’t ethical, as an app that matches you to shares based on your values, we take a lot of interest in the area.

Generally, when talking about a currency, people don’t consider ethics of the currency itself.  They might have a view on the country and if it aligns to their values and morals. But rarely would they look so closely at the currency in isolation.  In the case of Bitcoin though because it’s more than just a currency, we can consider it on its own.  Not least because it crosses borders and is a disruptive technology that impacts the world we live.

What is Bitcoin really?

Simply put, Bitcoin is a digital currency which can be used for payments and as a store of value. It operates outside of existing financial systems and offers the ability to instantly transfer money and property at very low costs.  Other digital currencies include Ethereum, Litecoin and Monero.

There are no physical bitcoins and as a result all balances are kept on a public ledger in the cloud. All Bitcoin transactions are verified by a massive amount of computing power.  New ‘coins’ enter circulation using additional computing power, based on developing code to release new coins.  Known as Bitcoin mining, this involves solving a computationally difficult puzzle to discover a new block, which is added to the blockchain, and receiving a reward in the form of few bitcoins.  It’s supremely geeky stuff.

Is it an Ethical investment?

At Goodments, we know that ethics and sustainability are in the eye of the beholder.  What one person thinks is ethical or sustainable may be different to someone else.

That said, sustainable investing can be assessed against 3 key criteria; Environment,  Social and Governance (also termed as ethics or transparency).  Ultimately, for investors looking to make an ethical investment, will this share have a positive (or neutral) benefit to the environment and/or society.  So we’ve considered Bitcoin through that lens.

  1. Environment

As we look at Bitcoin, right now there are some significant negative environmental impacts.

Wired recently reported that each bitcoin transaction requires the same amount of energy used to power nine homes in the US for one day. And miners are constantly installing more and faster computers. The total energy use of this web of hardware is huge—an estimated 31 terawatt-hours per year. More than 150 individual countries in the world consume less energy than this amount annually! 1

Some argue that although this is significant, it is less than the banking sector.  However, at this stage Bitcoin is a counter currency, new to the market and should be starting out on a better footing with greater efficiency.

  1. Social

Assessing the social impacts of Bitcoin is challenging as there is little data available.  What it is doing is helping to equalise wealth, making a great deal of new and young investors incredibly wealthy.  According to Bitpay, Bitcoin is supporting less developed economies with Latin America showing the fastest growth in transactions. 2 Depending on which side of the fence you sit, there is an argument that the anonymity that Bitcoin transactions bring are a benefit to heavily surveillance societies.   But at this stage it isn’t clear if Bitcoin is just creating a new wealth gap, present across a younger tech-savvy generation.

  1. Governance

Governance is commonly understood to be a measure of transparency, control and accountability.  Today, Bitcoin is inherently secretive and protective of providers and users, it’s unregulated and control sits with few secretive independent ‘miners’.  There is also a lack of protection for people who get hacked or lose their money.  In many ways, it operates on the black market (or dark web) which doesn’t help it rate well on the governance front.

So….

On balance, Bitcoin today probably can’t be seen as an ethical or responsible investment. But what about in the future?

The future of Bitcoin

Today, we are not even truly sure if Bitcoin and cryptocurrencies as we know them will be around in 5 years, or if they will be replaced by something completely different and as yet unknown.

Brian Forde, former White House Senior Advisor and current Director of Digital Currency at the MIT Media Lab compares the infancy of bitcoin and cryptocurrency to the early days of the internet and the introduction of email.  Which we now know was the tip of the iceberg.

There is much commentary about the opportunity for Bitcoin to be a game-changer when it comes to wealth distribution.   If Governments were to embrace it, as secondary to their national currency, and experiment with its use to distribute wealth (e.g. as a source of universal income or benefits) it could be used and regulated to lift huge portions of society out of poverty.  Its digital nature brings with it the possibility of regulating and monitoring it.  Allowing Governments to keep it in the hands that need it and on the goods they need without risks of it being corrupted – in the way an untraceable physical currency can.

In conclusion 

Goodments doesn’t yet enable our investors to invest in Bitcoin on our platform.  Today, it’s draining on our environment and lack of regulation make it an unlikely candidate for Ethical Investment of the Year.  But if as Bitcoin could be used in a more positive way in the future, it is something we look forward to seeing unfold.

How an inner-west, solar-powered beer project inspires hope for a sustainable future

You would have to agree that those Inner West folk are an eclectic and interesting bunch. At the heart of the inner west is Newtown and its neighbouring suburbs, recognised by its authentic and offbeat style, vintage and artisanal wares, coffee cred, craft beer breweries and communal atmosphere. Think Brooklyn, East London or the Kreuzberg borough of Berlin. The general vibe of the Inner West could be reminiscent of old school sentiment. However, the Inner West-ers are certainly not behind the times when it comes to embracing new technology. After all, there are still some things that are uncool about staying in the past, such as investing in fossil fuels, fast fashion and unethical work practices.

A brilliant example of the adoption of renewable energy into a business model is the local brewery legends at Young Henrys. The founders of the successful brewery, Oscar McMahon and Richard Adamson, are in touch with their communities love of craft beer. What they are also clued in to is the local communities interest in innovative renewable energy projects. As a savvy business decision, it just made sense to combine the two — and what do you get? Solar-powered beer, of course! The idea was wildly successful in terms of investor interest. So how did it all happen?

Solar-power will give breweries that extra strength to succeed in the future

Pingala, a Sydney-based company specialising in community owned solar projects, came to Young Henrys with an idea. What if the solar installations they were planning to put on their roof were owned by local people, invested in the future success of their company? Incorporating that idea paid off. Demand for investment in the Pingala project was so strong that shares were sold in 9 minutes (the investors were drawn from a barrel of 300 applicants). Young Henrys pays Pingala for the lease of the solar panels, Pingala generates a decent income to pay their costs and shareholders are expected to earn a 6–8 per cent return for investments. A rewarding investment for the local renters in the area who can’t invest in their own homes but instead can put their money into renewable projects in the community. It’s a mutual benefit for all, especially Young Henrys, who become owners of the solar panels once they are paid back. Solar panels pay for themselves in around 7–8 years and after that they will receive free energy to power their business whenever the sun is shining. In fostering a community project, Young Henrys are able to forge a deeper engagement between consumers and their brand and become game changers in their own right. As McMahon proclaims “solar-powered beers tastes better.”

Pretty exciting right? Now imagine if we took that Inner West mindset and applied it on a global level. It is empowering to think of the collective influence of people on a global scale, investing in companies that have sustainability at the core of their business models and are taking responsibility for what they produce and the long term effects it has on the world. Ultimately setting a global standard and demand for companies to use their business to address important issues in the process.

Curious about using your investments to create a better world? Why not check out Goodments. By recommending you companies that align with your ethical and social values, Goodments makes it easier to make informed investment choices. Whether that be to invest in companies that are making the switch to 100% renewable energy, or creating initiatives to ensure equitable rights for employees throughout their supply chain. Importantly, these investments are shown to be more profitable in the long run, so you can invest ethically without sacrificing returns. Still not convinced? Think about that extra cash that could be spent on craft beers and fair-trade coffee.

Header Image courtesy of Young Henrys

 

Six simple and realistic ways you can save the environment.

  1. Wash your dishes wisely. Dishwashers use less soap, water and energy than hand washing. Try to only ever run full loads and avoid pre-rinsing your dishes before you pack the washer.
  2. Have a meat free day. Raising livestock is not an environmentally neutral process. Chickens, sheep, cows and pigs — the animals we most commonly eat — drink a lot of water, take up considerable portions of land and emit a significant amount of greenhouse gases into the atmosphere. There’s also the energy required to transport meat and keep it refrigerated, and issues with deforestation, desertification, soil erosion, water pollution and overgrazing. Every meat free meal you consume has an impact. If vegetarianism and veganism aren’t for you, why not try a meat free day every week instead?
  3. Straw no more. Plastic is bad. We all know this. Single-use plastic, however, is especially bad. A straw will be used for a few minutes at most. Its purpose is to… drink? Something our mouths are very capable of doing on their own. Bottom line: straws suck. Don’t use them.
  4. Offset your air travel emissions. Travelling by plane is the least efficient mode of transport, emitting thousands of kilograms of greenhouse gases into the atmosphere every flight. Airlines and online booking agents often provide the option of paying a few extra dollars which are then invested into environmental projects. If you can splash thousands of dollars to travel this beautiful world of ours, you can surely spare some loose change to keep it that way.
  5. Reuse, recycle and repurpose fashion. Your fashion footprint is bigger than you’d expect. Nylon takes over 30 years to decompose, cotton is a chemically dependent thirsty crop and polyester is produced from petroleum. Looking trendy isn’t cheap on your pocket or the environment. Where possible, use the sacrosanct 3Rs — reuse, recycle and repurpose. Cut up an old tshirt and use it as a cleaning rag. Sell your much loved threads at a fashion market. Buy vintage clothing. Cut up a pair of jeans into trendy shorts. Iron on a patch to transform an old piece into something new. Get your clothes tailored if they no longer fit. Reinvent what you already own.
  6. Books be gone. Whether it be a university textbook, a magazine or a novel you want to dive in to, ebooks are often notably cheaper than physical copies and don’t require paper and ink. If however you enjoy the feel of book within your hands, you could always buy from a second hand bookstore or be ultra old school and head to your local library.

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