Uphold has launched a new token called Bitcoin Zero (BTC0), focusing on net-zero carbon emissions, but is this new currency with a Bitcoin-Esque name really what it is cracked out to be?
“Earth provides enough to satisfy every man's needs, but not every man's greed.” ― Mahatma Gandhi
Bitcoin Zero is an ERC-20 token, which means it operates off of Ethereum (ETH) as a token and is thus not environmentally friendly on its lonesome, albeit more-so than Bitcoin’s power-extensive Proof-of-Work (PoW) consensus mechanism. Ethereum still uses quite a bit of power, and ERC-20 tokens operating off of the #2 coin are subject to the same power consumption and outrageous gas/gwei fees.
Whenever I see a new currency with the potential to help the environment, I am intrigued as well as cautious. Uphold claims that using this currency operating off of Ethereum will produce zero carbon emissions while saying you’d be holding “actual Bitcoin” while helping the environment. How could this be possible if Ethereum is a power hog? Uphold says that the ERC-20 token has the “properties of Bitcoin and zero net emissions,” which is a highly contradictory statement.
Taking a look closer, the way Bitcoin Zero functions is by wrapping Bitcoin similar to Uniswap, a DEX (decentralized exchange) that supports ERC-20 tokens. Currently, all ERC-20 tokens have extremely high gas fees; costing me roughly 6$ in Ethereum to withdraw a mere 11$ in Ampleforth (AMPL) earnings from Publish0x which is, of course, not worth it at this moment in time. Ethereum keeps promising a solution to excessive power consumption and a Layer 2 gas solution. ETH has failed thus far, and ERC-20 tokens are losing value to me more every day regardless of their market prices.
BTC0 is a new wrapped Bitcoin that has the potential to remove 10 tonnes of CO2 (carbon dioxide) from Redd+ rainforest projects which are Verra verified, along with other international agencies that monitor environmental standards. Bitcoin Zero tokens are highly intriguing, but it comes with flaws. The price of BTC0 is entirely different than Bitcoin itself, of course, but still subject to the same market rules as any other currency, which does not make one Bitcoin Zero equal to one Bitcoin.
Instead, Uphold speculates it will likely cost more than Bitcoin to cover the added costs of the UPCO2 token (currently worth $11.01 USD per token), which is Upholds earlier announced carbon-neutral token that received very little attention. So far, the premium holds true as the current price of BTC0 is $22,920 USD while Bitcoin itself is at $22,748 USD (12-18-2020 - Bitcoin broke $24,000 today 12-19-2020!).
Why do they keep calling Bitcoin Zero real Bitcoin? Well, they pair Bitcoin on a 1:1 ratio in real-time and then burn 10 UPCO2 tokens along with their underlying carbon credits for each BTC0 that is minted. By doing so, they allow a “derivation” of Bitcoin to exist on the Ethereum network, which is backed by Bitcoin (BTC) in Uphold’s holdings. Despite what Uphold says, this ERC-20 token is not actual Bitcoin, and I would write this off as false advertising even if it is better for the environment. I believe Bitcoin Zero is Uphold’s response to a lack of interested investors for UPCO2, though that is speculative.
UPCO2 is the first carbon token on a public blockchain. By buying it, you are told you are “making the world a cleaner place” by preserving the planet’s rainforests. It was created by the Universal Protocol Alliance with other unmentioned “leaders in carbon credit managers" while being backed by the REDD+ carbon credits. REDD stands for a United-Nations supported framework, “Reducing Carbon Emissions from Deforestation and Forest Degradation,” while the + represents their commitment and role in implementing other sustainable practices such as conservation and increasing stock share value for carbon-neutral businesses.
How exactly does this help the environment? Every time they burn a single UPCO2 token, it is supposed to represent 1 tonne of CO2 being removed from the environment, particularly in rainforests. By burning 10 UPCO2 tokens for every minted Bitcoin, it should theoretically remove 10 tonnes of CO2 from the environment. Sounds lovely, doesn’t it?
So, why am I not thrilled? I will tell you. Bitcoin Zero is not Bitcoin, and by holding it, you are not holding Bitcoin. On top of that, you are subject to Ethereum gas fees on every transaction, which are substantially higher than Bitcoin’s already relatively high tx (transaction) fees. So, while you could help save the environment, you’ll be paying more for it, and you will not be doing it via holding real Bitcoin. This reality is not what Uphold advertises; they have essentially used Bitcoin’s name during its all-time high to promote an Ethereum token.
My conclusion is that while this could help some wealthy investors improve the planet, it is not suited for ordinary investors and holders. BTC0 doesn’t compare to EOS or Nano as a valid alternative for being environmentally friendly in everyday transactions without serious fixes to Ethereum first. Bitcoin Zero appears to be a whale’s game, and for the sake of the world’s forests, I hope some whales bite the FOMO, but I also hope they don’t take financial losses they weren’t expecting because of it.
I have become increasingly unimpressed with Uphold. I would far rather invest in something that I can treat like Bitcoin or better. EOS holds the most promise for the future, with Nano slightly in the lead in the meantime. Bitcoin can not last forever due to scalability issues, and Bitcoin Zero is directly tied to Bitcoin’s price and, thus, fate. My heart remains with EOS in the long-run, and Nano or Stellar Lumens (XLM) in the short-term.
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