Analysis: JAPHET MESA
I READ with interest an article in the Zambia Daily Mail of Tuesday, July 3, 2018 titled Bitcoin: Zambia not yet ready. Whilst the information presented in the said article was the opinion of the author, there are a few issues that arose from it that I wish to address.
Worth noting is the tagline of the article that read, “the decentralised digital currency has no central bank regulation”.
However, this absence of regulation or central authority is the inherent nature and essence of Bitcoin; and arguably is the very reason of its exponential growth. Bitcoin is a peer-to-peer cash transfer system, which allows for the transfer of value between two people without having to go through a third party or central authority such as a bank – note the use of the word ‘value’ instead of ‘money’. There is a rich history behind the emergence of bitcoin but that is a conversation for another day. What is key to take away from this article is that bitcoin allows people to transact without a middleperson.
It is important to keep in mind that bitcoin is only one application of a broader technology known as blockchain technology.
This new disruptive technology is primed to change the way we do things now and in the near future, synonymous to the way the Internet did in the 1990s. However, because Bitcoin was the first publicly known application of blockchain technology, we really cannot talk about blockchain without talking about Bitcoin.
In a similar manner, we cannot talk about cryptocurrencies without talking about Bitcoin.
I will now address some issues from the article referred to above. The writer states that Bitcoin is ‘anonymous’.
This is a common misunderstanding of the nature of Bitcoin transactions. Bitcoin is not anonymous, it is pseudonymous. This means that transactions are written under unknown identities.
If anything, it is more transparent than our traditional bank transactions. In the same manner that we cannot tell who owns what bank account simply by looking at their account number, we also cannot tell which Bitcoin address belongs to who.
However, unlike traditional bank accounts where we the outsiders cannot track transactions, a bitcoin transaction can easily be tracked by anyone on a blockchain explorer such as ‘blockchain.info’ provided they know the bitcoin address. What does this imply?
If two parties enter into a transaction of public interest, for instance, any ordinary member of the public can easily follow the proceedings of transactions such as when money is remitted and how much.
Whereas if a transaction is happening in a traditional bank such a process will only be known by the two parties privy to the transaction i.e. the account holder and the bank itself, in this case, the bank is regulated by a central authority.
Bank of Zambia governor Denny Kalyalya also alluded to the anonymity feature of Bitcoin expressing concern as to “who one turns to when things go wrong in a transaction”.
Granted, the absence of an authority to turn to in such an instance is one of the pitfalls of Bitcoin.
However, this does little to validate the position that we should stay away from the technology.
Many people have at times bought items off the internet, be it Amazon, E-bay, Alibaba etc. but did not receive the item or received an item not fitting the description of what they paid for.
We did not turn away from using the internet for e-commerce purposes. Instead we found ways of transacting securely and increased our security awareness.
Another common argument from the anti-bitcoin camp is the one put forward by Wala Chabala, the former chief executive officer of the Securities and Exchange Commission, that cryptocurrencies are “conduits for vices such as money laundering, tax evasion, drugs and arms peddling, smuggling and other nefarious activities”.
I would argue that the said activities have been in existence and are still ongoing by way of fiat money. After all, similar offences have been committed via other means such as aeroplanes and cars, people have been defrauded on the internet, and other scenarios too numerous to note here, yet these things have neither been banned nor shunned.
As a cryptocurrency and blockchain technology enthusiast, I am glad that the words “not yet ready” were used in the reference article because this implies that there is hope that the central bank will one day find an avenue of making use of the new emerging technology.
Cryptocurrencies allow for the transfer of value relatively faster and at low or no cost.
One can send a cryptocurrency across the world and it will be received within minutes. One can also choose whether or not they wish to attach a “transfer” fee known as mining fee.
The opportunity presented here is that a person in Lusaka can easily send money to their loved ones in the far-to-reach areas of Luwingu at no cost at all.
Additionally, in its current and intended form, there are no monthly fees or minimum balance requirements.
This can also drastically reduce the cost of transactions for businesses and individuals alike.
The technology underpinning cryptocurrencies has far reaching benefits beyond peer-to-peer cash transfers and its full potential cannot be imagined. The principles of blockchain technology make it worth considering.
The Distributed Ledger Technology (DLT) makes the blockchain transparent, tamper-proof, accurate and ‘trustless’.
By trustless, I mean that we do not have to trust that the provider of the data is acting honestly because we know that it is easily verifiable, can be authenticated and cannot be altered arbitrarily.
A great many opportunities are presented by this technology. In countries like Estonia, the entire national identity system is on a blockchain. This does away with issues of identity theft as well as forgery or alteration of official documents.
Companies such as Everledger are able to track a single diamond from the moment it is mined, all through its journey until it is put on a shelf in a jewellery store.
This can facilitate better trade as issues of proof of origin and ownership can be verified and authenticated.
Blockchain technology is in its infancy and as such there are a lot of grey areas. However, the consensus is that it is here to stay.
Because Bitcoin is leading the conversation of blockchain technology and cryptocurrencies as an investment option, it is important that people are given accurate and verifiable information about it.
It is for this reason that we founded a community called Crypto Tamanga.
This is a community of cryptocurrency and blockchain technology enthusiasts in Zambia.
The mission is to establish a countrywide network of cryptocurrency and Blockchain enthusiasts with the aim of disseminating accurate and relevant information about cryptocurrencies of which the main one is Bitcoin.
I realised that one of the barriers to adoption of cryptocurrencies both by individuals and regulators is lack of or insufficient knowledge and information, as well as misinformation.
People get into Bitcoin expecting to get rich overnight, which is not the case.
I agree with the chief executive officer of the Securities and Exchanges Commission, who said that “the onus is upon the investors to understand the risks and benefits associated with them (cryptocurrencies) before deciding to invest in them.” It is for this reason that as a community we have embarked on a campaign to create awareness and provide free information to the general public.
We have since conducted a number of talks in Lusaka as well as Ndola on the Copperbelt.
As advised by the US Commodities Futures Trading Commission (CFTC), potential investors should be wary of coins or crypto schemes that over-promise or guarantee some kind of future value or return.
People should also be wary of pump and dump schemes operating on crypto exchanges. I have been a victim of these.
I am a so-called self-proclaimed educator of Bitcoin and blockchain technology.
I have attended a number of online courses in the subject and I am a Certified Blockchain Expert (CBE) via the Blockchain Council – India.
I believe that the hype around Bitcoin as a get-rich-quick investment should not overshadow the ground-breaking technology.
After the dust has settled, it will be important for the country to look forward and not lag behind when it comes to this technology and the opportunities that it presents.
The author is a Certified Blockchain Expert, cryptocurrency and blockchain enthusiast and co-founder of Crypto Tamanga community.