Updated: 4 days ago
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 crypto currency that enables people to buy online and spend as freely and anonymously as if you were using cash. Satoshi’s innovation that powers Bitcoin and all crypto currency 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 its no ones job to do the work. Instead the system pays Bitcoins to every computer involved in this ledger. Bitcoin is one of many digital currencies. But it’s significant because it’s the mother of all the digital currencies. 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 in a rather unconventional and unfamiliar way through Bitcoin 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 1 USD value back in 2008. But 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, buyer and seller 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 rout all their moves to a central authority. That’s why many intermediary sites e.g. Amazon need to check with buyers’ banks to ensure that they’re good for the money buyer promises to pay.
The Internet is built on the fundamental set of assumptions that everyone is a trusted user. A lot of things that we do online is exchange 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 many third parties that have solved different problems. But this doesn’t always go well because third parties use our personal information without our approval. For example, you might think that Facebook is a great tool that enables you to exchange information because its easily accessible, flexible, has many tools that enable you to somehow ease your life and most importantly, it’s free. Little do you know, you’re actually paying them by giving them your data, including all your personal information. Making Facebook the big brother watching, which brings us back to the issues that Blockchain is trying to solve.
The digital currency is simply 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. The reason of having a digital currency was to solve the Byzantine General Problem. There is no governing body looking over your money while having the power to cease it at any time. On the 12th November 2019, The Bank of Tanzania made in a public notice banning the use of cryptocurrencies in Tanzania. To be fair, in some countries, criminals use cryptocurrencies to run Illegal services and Tanzania is one of the many countries in the world whom have disapproved the use of cryptocurrency.
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? Since the government creates money through the Central Bank, then gives the money to commercial banks to issue loans, there is a notion among the public that anything that threatens the banks also threaten the government. But this is not true, especially with digital currencies. 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 crypto currency 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.
There are other digital currencies that tender their own unique financial services such as Ethereum, Litecoin, Ripple and Dodgecoin with each having their own “coins” respectively. 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 new 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 stay, and make the world better. Are you preparing for what will inevitably come?