For one, trying to decipher and understand the function of cryptocurrency in today’s world seems to be a complex issue. So what is cryptocurrency?
Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, which operates independently of a central bank. This technology is revolutionary as it changes the way we see traditional banking and how it will be done in the future. If it has the capability to generate units (create its own currency) and allow for verification of transferring of funds, why would you need a bank in the future to do this?
It is estimated that only 2% of the world’s population knows about bitcoin, which is the world’s first cryptocurrency. Let’s put this into perspective, there are about 7.4 billion people in the world, and between 12-14 million people know and are using Bitcoin currently.
Bitcoin was created in 2009 by a Japanese national by the name of Satoshi Nakamoto. He created this open source software, designed with clever algorithms to solve mathematical problems.
As bitcoins are created and held electronically, there is no need to spend on printing, like traditional fiat currencies, like the rand or dollar – they are produced by people running computers all around the world, using this software that solves these mathematical problems.
It is a decentralised system, meaning that it is not owned by any governments or authorities. Transactions are made with no middle men – meaning, no banks. Bitcoin is a currency that was created with an intention to create more wealth for people, it is different from traditional currency in that, it is not only viewed as a currency but as a commodity as it appreciates over time.
“Nakamoto, created a cap on the number of bitcoins that is going to be released into the world. 21 million bitcoins will be created and it is estimated that by 2140, the last bitcoins will be dispersed. It is also scheduled to be released in tranches every four years, which is known as bitcoin halving. As we continue into every four years, the lesser the bitcoin will become and the harder it will be to get them. As the demand for bitcoins increase, because of the widespread use of bitcoin as we progress into the future, the higher the price will become, says Shireen Ramjoo, Founder of Liquid crypto-money institute.
Currently there is 25 bitcoins, being released every 10 minutes in the system. As the halving allows for scarcity of the bitcoin, increasing it’s price. Experts predict that the price of one bitcoin can go anywhere up to $ 10 000 (145 000) in the next few years.
So why should we be more interested in this?
The fact is that for centuries we relied on the banking sector to take care of our traditional banking needs. Now we moving into a ‘money-revolution’ where traditional currencies would not be used as much as we use them now, into our future. If it has the power to eradicate a various number of current banking complexities, like it being faster, cheaper and allowing us more control of our own banking, why would we need the middle man?
What we witnessing is a major evolution of how traditional banking will be in the near future. It brings with it the memory of the time when the World Wide Web (internet) first started. Many were not sure of its longevity, yet today if we look back we can’t see how we could be functioning without it.
Many of us also assume that because it is a digital currency, we cannot physically use this money. That is far from the truth. Bitcoin, works as a normal currency. Once you get your bitcoin debit card, which is a normal Visa or Mastercard, you can swipe at any point of sale system, which can be at your local Spar, Woolworths or even at the petrol station. You are able to withdraw local currency using your card at any local FNB, Absa, Nedbank or Standard Bank ATM.
First world countries have a wider network of bitcoin ATMS already, in South Africa the first bitcoin ATM was installed in Kyalami, Johannesburg in 2014.
“Worldwide developments are taking place of governments starting to regulate bitcoin and accepting it as a form of currency in respective countries already,” says Ramjoo.
The advantages of using cryptocurrency weighs far more positive than using fiat currency because it allows people more freedom with their own finances.
1. Money can be sent globally in a matter of minutes.
2. Fees are minimal set at 0.01% at any amount you transfer whether it is R100 or R1 million rands.
3. It’s fast, efficient and safe.
4. No tax, because it is a decentralised currency not owned by government authorities. But there are worldwide developments of countries regulating it as they cannot stop it.
5. It’s recorded on the blockchain which is a transparent system which we all can see.
6. No third party seizure. Governments cannot freeze bitcoin accounts allowing users of bitcoin to use their money freely. Once regulations are in place they would have access however to such data.
Interested in learning more on digital currencies and opportunities around it. Go to www.liquidmoney.biz