eBusiness Weekly
Jeffrey Gogo
When the history of anarchism in global economics is written, bitcoin will have a special chapter.
Started by a shadowy individual (or group) known as Satoshi Nakamoto in 2009, as the world went through its worst financial crisis since the Great Depression, bitcoin, the world’s first decentralised currency, has come very far within a short space of time.
From the start, bitcoin (BTC) set out to disrupt the entrenched world financial system that is controlled by governments, by offering an alternative virtual currency that is controlled by nobody, only facilitating transactions between individuals via a network of tamper-proof distributed ledger called the blockchain.
As the disruptive cryptocurrency celebrates its 10th anniversary this year, think of bitcoin, both the network and the currency, as an enabler of the digital left and freedom of expression in general, because it’s structure is almost free from corporate and political control.
There is the case where MasterCard and one other financial giant froze donations to Wikileaks, apparently in the service of US interests. Wikileaks turned to bitcoin to evade the financial censorship. We have seen countries like Iran, Venezuela do the same, turning to cryptocurrency to try and evade US economic sanctions.
Think of Alex Jones, R. Kelly and XXX Tentacion, recently removed from Google, Facebook and Spotify for the political or moral content of their work or private lives. This says frightening implications for free expression under the “monopoly” institutions that now rule communications, culture and economies.
Cryptocurrency, as pioneered by bitcoin, seem to be a way of undermining state and corporate control and allowing less mediated economics.
Nakamoto came up with a concept in which the seller has power and eliminates the middleman, remove transaction fees, make transactions more transparent than the physical banks as well as cut on corruption.
Thus, virtual currencies have to some extent managed to abolish the centre, and that’s all thanks to bitcoin, which in its 10 years of existence has inspired the creation of more than 1 800 other digital coins, including bitcoin cash, ethereum, litecoin and ripple.
From just $1 in 2009, BTC hit $1 000 for the first time on November 27, 2013, an epic event that pointed towards the digital currency entering the fantasy realm.
Today, bitcoin trades at around $6 400 but reached a record high $20 000 at the end of last year. There are many all-time highs that might warrant mention, but the $1 000 milestone saw bitcoin sticking two fingers up at the establishment.
After exactly a decade of operating, BTC now accounts for 53 percent of the $210 billion global cryptocurrency market capitalisation total, according to coinmarketp.com.
Facebook co-creator Tyler Winklevoss said of bitcoin: “We have elected to put our money and faith in a mathematical framework that is free of politics and human error.”
McAfee founder, John McAfee said the that cryptocurrency could not be stopped but would be everywhere. In fact, the world had to readjust while others said it would do to banks what electronic mail has done to postal mail.
And true to their views, bitcoin has spread across the globe like veld fire, reaching even to the third world, which usually catches on a bit later.
In the last five years alone, bitcoin’s total market value has ballooned by 9 010 percent to $112 billion from $1,2 billion recorded on May 04, 2013.
During that same five year period, its price has grown 5 750 percent to $6 494 from $111,25.
On a year-to-date basis, it has, however, contracted with total market capitalisation falling by 50 percent to $112 billion from $227 billion recorded on January 01.
In Africa, bitcoin has seen some growth but many governments still view the currency with suspicion.
For instance, Zimbabwe banned the trade in crypto currencies together with neighbouring Zambia issuing a caution.
However, punters still trade through social media platforms, due to the high returns they offer.
But cryptocurrency use is projected to grow in Africa. In countries like Zimbabwe, financial literacy is still low with access to traditional banks still limited.
At the same time, there is a rising appetite for use of internet based transactions on the back of increased use of data and internet services especially among the young generation.
New technological innovations being pioneered will likely extend to cryptocurrencies as the younger generation becomes more curious and willing to tap into the new system that seemingly offers higher returns as opposed to interest charges from traditional banking system.
Additionally, the waning confidence in the central banks and traditional banking system creates opportunities for crypto currencies.
Growing populations in Africa are working in the diaspora which creates room for crypto currencies to grow as means for remittances as opposed to the usual international money transfers, which have also become unreliable in countries like Zimbabwe.
Add to that, crypto currencies offer a safe hedge against inflation while they can also be used as medium of exchange when making online purchases, which is now the “in-thing” with the younger generation.
According to Bankymoon, an internet based crypto currency publisher, the global financial system itself is at risk with negative interest rate policies in the major economies and extremely high levels of government debt exposing its fragility.
