Money makes the world go round.

Money seems to be one of the most sustainable inventions of the world. If one spends it, another one earns it. Bills and coins are passed from one hand to another. They don’t end up in garbage cans. At least not voluntarily. But is money really that sustainable? And what about digital money? What about crypto currencies?

At Starlab we believe in sustainable science. But we also believe that sustainability is the key for a better future in general, and in every aspect of life. Our scientific curiosity, our urge to explore, doesn’t stop at the lab door. So we decided to take a closer look at one of the oldest inventions of the world: money.

Betting on Bitcoin: It seems to be more than just a short-term hype.

In December 2020, the crypto currency Bitcoin reached a value of $20,000 and even climbed up to $30,000 a little later, and on 5th January, it passed the mark of $35,000 which is an all-time high for a crypto currency. One day after that, it reached $40,000. When it comes to monetary value, the potential of crypto currency is high, no doubt. But are there other advantages that could disrupt our plain old fiat money system?

One is definitively the inflation protection. Whereas fiat money is issued by a central authority like a state and can theoretically be printed in an unlimited quantity, the contingent of crypto currencies is limited in its code. Therefore, it cannot be decreased in its value by a flood of new crypto currency units.

Crypto currencies give power to the people. And emissions to the world. 

A second advantage is that crypto currencies cannot be manipulated as easily as fiat money. Decisions are made by the computational cost, the so-called proof of work. Users worldwide certify the transactions by providing their computing power. Each transaction is only conducted when the majority of users come to the same conclusion. Power to the people! But what about the environmental effect of crypto?

Unfortunately, mining requires a huge energy expenditure. The computing power that needs to be invested is immense. It consumes as much energy as Switzerland, Sri Lanka, or Jordan. That’s about 0.21% of the yearly global consumption. No wonder, as the supercomputers run non-stop to write the blockchain. Not cool. But fiat money is not sustainable either.

Money doesn’t bring happiness. At least not for nature.

Cash, for instance, causes high emissions in its production process. Banknotes are often made of cotton paper which means a commodity needs to be cultivated, cropped, transported, and manufactured. The transport of the banknotes alone leaves a big carbon footprint. As do the production and operation of ATMs. And the production and transport of coins harms nature even more.

Credit cards are not really sustainable either. They are made from plastic, their production causes high emissions, and so does their transport. The carbon footprint of a credit card is equal to 13 dollar bills. Furthermore, after their use, the cards are cut up and discarded, meaning they will most likely end in a landfill. 

Virtual credit cards are just the beginning. There is hope for a sustainable money system in the future.

In the end every payment you make will end up hurting the environment to some extent. No matter if you use cash, your credit card, or your paypal account: a transaction will generate data and even if it’s just a little piece of virtual information there comes emission with it. Data needs to be calculated, securely stored, and protected which requires computing power, and therefore energy. In addition some transactions create visible trash in the form of a receipt. This little piece of paper again requires energy, paper, and ink. It may not seem like a lot, but just imagine thousands of stores printing thousands of receipts each day.

 Money seems to make the world go round, but harms it severely at the same time. So, is there any hope? Yes, there is. For now, virtual credit cards are a good alternative as they don’t need to be produced, transported, and discarded. However, paying with a credit card in general is still better for the environment than using cash.

So what about the long-term chances for a sustainable monetary system? The good news is, that due to technological progress we are headed in the right direction. But it doesn’t stop with virtual credit cards. Many companies work on eco-friendly computing and strive to minimize the carbon footprint of each transaction.

Each one of us can contribute to eco-friendlier transactions. Each day.

We have a long way to go until then. But in 2021, we can also make a difference now. Due to COVID-19, cashless payment is gaining ground. More and more stores, shops and vendors have recently become more modern and started to change their payment policies. Maybe this is a good time for all of us as consumers to relinquish cash money. And receipts, as that saves paper, ink, energy, and causes less trash.

What do we think? Sustainable money is a great thing. Buying sustainable goods with it is even greater.