But why it is coffee? Many people don’t even drink coffee, so what should they buy every morning with cryptocurrency? So why we have to care about buying coffee with cryptocurrency?
Bitcoin and Starbucks
In 2018, Starbucks and several other companies including Microsoft, Intercontinental Stock Exchange, BCG announced the establishment of a coalition called Bakkt. This alliance was established to create a global network based on Microsoft’s cloud solutions, to manage and use digital assets, including cryptocurrencies.
This information leads people to speculate that Starbucks will soon allow payment with cryptocurrencies and Bitcoin at its stores. However, Starbucks representatives have corrected this information and confirmed that there is no buying coffee at Starbucks with Bitcoin.
“It is important to be clear that we do not accept digital assets at Starbucks. Instead, the platform will convert digital assets such as Bitcoin into US dollars, so that payments can be made.”
The Starbucks representative further affirmed: “Customers will not be able to pay for a Frappuccino with Bitcoin”.
However, the platform of Bakkt will be able to help convert digital assets like Bitcoin into US dollars, for in-store payments. This platform makes it possible for Bitcoin or other cryptocurrencies to be used as a form of payment without having to worry about their disadvantages.
Why is it coffee?
In fact, this is just an example to help you understand easily, but it is also a meaningful action. More than 450 million cups of coffee are consumed in the US, every day. Coffee is a language that many people understand. But Bitcoin is not. Until now, in 2021, when bitcoin has shaded on every financial news site and forum, there are still a lot of people who really don’t understand what bitcoin is.
So buying coffee with Bitcoin is the first step we all need to understand how cryptocurrencies work.
Economist, crypto investor, and blockchain researcher, Garrick Hileman, simply says: “Buying something most people can recognize makes a complex technology easier to grasp.”
Using cryptocurrency as a means of payment in most purchases makes it easy to understand. Buying coffee is very simple, buying coffee with cryptocurrency is the same.
In other words, being able to pay for your coffee with cryptocurrency isn’t as simple as buying coffee. It’s about the clear opportunity to have a truly global currency without government control.
But to get there, to gain that power, we must be able to buy coffee and any other everyday items with cryptocurrency.
If we reach the threshold where it is possible to buy coffee with Bitcoin, it makes sense to assume that most other things can also be bought with cryptocurrencies. A world where everything can be bought with crypto is a world, whereby things like untraceable online payments, privacy, and transparency are prevalent.
Can I use bitcoin to buy a cup of coffee?
Temporarily setting aside the controversy about the future or the true value of Bitcoin, we return to the simplest question: “Can you use Bitcoin to buy a cup of coffee or not?”
The answer is “No,” unless the buyer and seller are trying to perform for fun. The reason is that Bitcoin has a huge disadvantage in doing small transactions, like buying a cup of coffee.
The transaction fee can be many times higher than the price of a cup of coffee, not to mention a transaction that can take hours to complete. The cost of a Bitcoin transaction on February 25 is $ 26.16. Buying a cup of coffee costs $ 5 and costs $ 26.16 in transaction fees.
This transaction cost changes from day to day, now increasing sharply because on January 25 it was only $ 7.4. And yet, from the time you pay for a cup of coffee in Bitcoin to the time the transaction is confirmed as valid, it takes about 10 minutes, enough for the cup of coffee to cool down.
Strange mechanism: Pay extra to be reserved early
News stories about Bitcoin are usually illustrated by a large B-shaped yellow coin. This is just a symbolic drawing and bitcoin is just a series of numbers and letters.
When using bitcoin to buy an item, information about this transaction is updated into a ledger that records all such transactions from the date Bitcoin was born up to now. Not surprisingly, by February 21, this file size reached 321 GB, increasing by 1 GB every few days. The hard drive of a typical laptop is only about 500 GB.
If anyone is allowed to write in this ledger what is the value of Bitcoin.
Before a transaction is confirmed to be recorded in the ledger, miners with powerful rigs of computers compete to solve increasingly complex problems for the right to update – when successfully updated they are rewarded with bitcoin – is the motivation for them to dig hard day and night.
It is this strange mechanism that spawns strange phenomena: buy a cup of coffee with Bitcoin but do not want to wait long, buyers keep paying a lot of transaction fees, their transactions will be processed by miners. before.
Only then can it be concluded that the proponents of Bitcoin were not being honest when preaching Bitcoin helped reduce the cost of using the currency as it was when it was born. They are also not honest when they boast that Bitcoin will treat everyone equally, regardless of customers, poor customers.
Never before has seen a payment service for people pay more be interrupted, encroaching on surrender like Bitcoin. Because the higher the fee mechanism, the sooner it is processed, many transactions have to wait up to 16 hours or more to be confirmed.
Huge electricity consumption
Bitcoin miners are using an enormous amount of electricity. According to a study by Cambridge University, total Bitcoin energy consumed per year is estimated at 120 TeraWatt hours, which is higher than the amount of electricity consumed by many countries such as the Netherlands, the Philippines, Belgium, Austria or Israel. In terms of emissions, every year Bitcoin produces 36.95 million tons of CO2, equivalent to the entire country of New Zealand.
Each Bitcoin transaction harms the environment equivalent to 680,000 Visa card transactions or 51,210 hours of YouTube viewing. I wish the activists for the environment are advocating the ban on nylon packaging and plastic straws also campaigning to ban Bitcoin transactions with similar vigorous movements.
Imagine that all the computing power used to mine Bitcoin has been transferred to solving the problems of mankind; Imagine that huge amount of electricity used to turn seawater into freshwater for people in dry areas. Wasting computing energy to mine Bitcoin can have consequences that cannot be seen in all.
For example, China has the largest number of Bitcoin miners in the world, for example, and they are taking advantage of its cheap hydroelectricity. Whether it has any effect on the flow of downstream rivers in Southeast Asian countries cannot be ruled out.
There is one more waste of Bitcoin that has not been mentioned by the press. According to the principle of every 10 minutes, Bitcoin transactions will be gathered into a block (block) for processing. To avoid anyone who can arbitrarily modify these blocks, it is specified that each new block, when added to the ledger, will have a piece of code connecting it to the previous block – hence the concept of blockchain. connected).
Miners use a computer to find this code and will be rewarded with 6.25 bitcoin for each block processed; If multiple machines are done processing at the same time, giving Bitcoin is like a lottery.
If the miner keeps calculating for the old block that has been processed, the result is not accepted by the network and is considered wasted effort. So it takes miners about 1 minute to receive the new block – as if 10% of the network’s capacity is wasted on waiting.
Bitcoin is the biggest environmental harm ever
Perhaps few people know that the world has mined more than 18.6 million bitcoin while the maximum number of Bitcoin that can be created is 21 million. That’s because the number of bitcoins awarded is cut in half every 210,000 times; once every 10 minutes 50 Bitcoins were created by 2017 to 12.5 Bitcoins and now there are only 6.25 bitcoins.
Today 900 bitcoins are created every day. It is calculated that the miners are harder and harder, the cost of mining is higher and higher, so the amount of electricity consumed, the amount of CO2 emissions is increasing because the final bonus is reduced to 0.000000011641532 bitcoin.
At that time, the last bitcoin, the 21st million, will be mined in 2140 and after that, mining is not meant to be rewarded with bitcoin, but perhaps to receive transaction fees. Therefore, transaction fees will also increase, not decrease as many people think.
All of these objective factors can help us conclude Bitcoin is the biggest environmentally damaging product ever. It is a speculative product that waits for price appreciation and cannot be used for normal transactions, so it will never become a true currency.
The ultimate goal: Massive application
In fact, buying coffee with cryptocurrency is not the main purpose of bitcoin or any other cryptocurrency.
Litecoin creator Charlie Lee made a very direct argument: “The more popular cryptocurrency is, the more everyday opportunities we have for it. The more daily opportunities we have, the closer we will come to mass adoption.”
“Indeed, buying coffee doesn’t need to be done with cryptocurrency,” Lee said. “Bitcoin was invented to be the currency for the internet – and buying a cup of coffee in the real world is deviating from its purpose.”
Indeed, bitcoin was created to be an internet-based peer-to-peer means of value exchange. Taking it offline – and spending it in real-world locations – always contradicts its original purpose, as that already has the cash to worry about.
The purpose of cryptocurrencies is not to completely replace cash and not to create a cashless society. For most bitcoin investors or cryptocurrency advocates, their sole purpose is to make profits with cryptocurrencies, as simple as that. But they do not want to remove cash from society.
Looking at the positives, cryptocurrency is a digital version of money and of course, cryptocurrency is just a profitable investment channel, not a substitute for cash. The popularity of cryptocurrencies today is purely due to the increasing demand of the population.
Hileman argues that our days of cash use can already be counted. As more payments are digitized, we may find ourselves in cashless societies, like those in Sweden, South Korea, and China.
Perhaps then, buying coffee with cryptocurrency is not just as simple as we think it is. Buying coffee with cryptocurrency is to protect choice and freedom.
For many professionals and investors, cryptocurrencies are seen as a hedge against inflation and a safe haven for assets in times of world volatility.
Maybe at present, many people still do not fully understand the value of cryptocurrencies, but surely the opinion of disapproval will change over time, as cryptocurrencies have more practical applications in life.
In times of uncertainty like the present, epidemics, trade wars, bitcoin in particular and cryptocurrencies, in general, are attracting more and more participants because this is the safest investment channel today./.