The Byzantine General problem was solved in late 2008 by an unidentified person called Satoshi Nakamoto. No one to this date knows this person, and we may never know who they/she/he is. Satoshi’s created the biggest innovation ever made since the Internet. He unleashed Bitcoin, a cryptocurrency that enables people to buy online and spend as freely and anonymously as if they were using cash. Satoshi’s innovation that powers Bitcoin and all cryptocurrency that come after it, is called Blockchain.
A Blockchain is a ledger of transactions, similar to what banks use, but copies of that ledger are distributed among computers all over the world, automatically updating every transaction. Maintaining this distributed ledger takes a lot of work but it's no one's job to do the work. Instead, the system pays Bitcoins to computer networks involved in this ledger. Bitcoin is one of many digital currencies. But it’s significant because it’s the mother of all digital currencies. Bitcoin is considered the gold standard of the digital asset class, with a market cap of 44% of all digital assets. Today fiat can be exchanged with any digital asset but Bitcoin paved the way for the many digital currencies, such as Tether, Ethereum, Litecoin, and thousands of other digital currencies that are known today.
For the past 7 years, there has been a spike of multi-millionaires who have earned their money through Bitcoins and other digital currencies. Many have misled people through ‘get money quick’ schemes especially in the African and Asian continents, while some have lost money because they decided to cash out at the wrong time, and the brave have decided to hold out a little longer to reap maximum benefits.
Today, there is a 50/50 chance that you're going to make millions through Bitcoin because one Bitcoin is valued at 38,000 USD compared to its 0.08 USD value back in 2010. Some, are betting that one day, 1 Bitcoin may be worth 1,000,000 USD. Today, the chance that you’ll make millions from digital currencies is smaller due to the complexity of separating the good stocks with potential in comparison to the bad ones.
To run a perfect online transaction system, buyers and sellers need to reach a consensus. Reaching a consensus depends on both parties trusting each other. One dishonest party leads to an unsuccessful transaction. This leaves buyer and seller no choice but to route all their moves to a central authority. That’s why we have intermediary sites e.g. Amazon.
The Internet is built on the fundamental set of assumptions that everyone is a trusted user. A lot of things that we do online are exchanging value (not just money) with each other. And since the pre-existing internet isn't parallel with our dishonest nature, we need a third party to verify everything. The Internet is filled up with third parties that help solve different problems. But this doesn’t always go well because third parties use our personal information without our approval.
The digital currency is used to buy things online without ‘the big brother watching’, no middleman and no one has control of the currency. The currencies solely rely on demand and supply. There is no governing body looking over your money. On the 12th November 2019, The Bank of Tanzania (BOT) made a public notice banning the use of cryptocurrencies in Tanzania. In some countries, criminals use cryptocurrencies to run Illegal services and Tanzania is one of the many countries in the world that have disapproved use of cryptocurrencies.
The digital space is growing at an exceptional speed. People are creating new areas on the web that have never been seen before, pushing the digital frontier further into the unimaginable. How should African governing bodies receive Blockchain technology? Digital currency should be taken just as another foreign currency. The government should bring their experts together and come up with a quick contingency plan on how to regulate it. In my opinion, the best way to regulated cryptocurrency is by working together with private companies that are already trying to offer this service here in Tanzania. The people deserve the right to decide whether to choose Mobile money, banks, or digital currency.
The government shouldn’t expect people to run to digital currency. There is a very high chance that people will refrain from jumping into it because of its illiquidity (in Tanzania) and volatility. Nobody would want to risk their hard-earned money and put it in an unknown currency unless they have absolute knowledge of what they’re doing. So I don’t think digital currency is much of a threat to our existing financial systems. Despite the common problem mentioned in the previous paragraphs, the other threat that I see is their 0% interest in transactions, which can be regulated. Some countries have taken extreme measures by taxing 50% interest in withdrawals, but we don’t need to go that far. People should have the freedom to trade digital currencies, as long as they’re aware of the risks.
As we move forward, new currencies (designed to cater to unique problems) will be introduced. The blockchain covers many things other than the financial aspect. Blockchain will improve trade, ownership, interoperability, credibility, and many more problems that we face today. We should embrace this innovation. We shouldn’t be the last ones. Instead, we should allow people to tweak with this new technology, so that we can find solutions to existing complex problems.
Digital currency is here to make the world better. Are you preparing for what will inevitably come?