Cryptocurrency: What & What For?
By Keith Asumba
Over recent months, years maybe, there has been all the furor about this thing called bitcoin. Just like any piece of innovation, it was received by many with open arms and by others with some disdain. But bitcoin itself represents another form of disruptive technology that aims to bring stability and transparency to the financial technology sector, and perhaps the world as we know it.
Bitcoin is a cryptocurrency – a digital currency that is cryptographed, meaning it’s a currency that bears data and information protected and secured by the use of codes that can only be deciphered and understood by those it is intended for.
Cryptocurrency presents a virtual form of currency that can be used for making online payments for your favourite and regular products and services. However, you do have to exchange real actual cash in order to buy these virtual coins or tokens to trade with – think of it as accessing games in a gaming arcade, or chips for the slot machines in a casino.
This technology is real, trusted, present, and very much active within our local fintech arena, and to give readers a better understanding of it, andgo Magazine sat down with Charles Kinyua, a 27-year-old I.T. enthusiast and businessperson who has been trading cryptocurrencies for over five years now.
“I first got wind of cryptocurrency in 2013, when I heard about it from a close friend. I didn’t know what it was but I took up interest. I started buying and selling different coins just for the money, I had no knowledge of the applications of blockchain.”
Blockchain is a composition of data stored in the same block. The chain refers to all the users it goes through to verify that all this data is indeed valid. That’s the blockchain – the very technology on which cryptocurrency is based and operates.
“When I was doing my research I’d find coins that are major, or more popular than others, and then I’d learn the reasons for why that was the case. I then took interest in the global applications of the coins, thereby understanding their potential value.”
Charles stated that in his early days of trading, there was a bull run – when the market is constantly accumulating. “The bad thing about a bull run, when bitcoin is going up, altcoins are suffering. But in this case, all the coins were shooting up!” A unique market scenario.
Bitcoin has low supply and high demand. Bitcoin can be mined, a resource-intensive process, nevertheless, and every bitcoin mined makes it harder to access it. “During the financial crisis of ’08/’09, Satoshi Nakamoto decided that we need another form of currency that is more stable, he designed bitcoin to enable people to have a better economy that’s decentralized from banks.”
Financially, cryptocurrency has hit a market cap of one trillion dollars, as an asset. Technologically, it can cheapen and hasten financial transactions. “Someone can send money from the United States to Uganda, for about ten Kenyan shillings – even if the amount being transacted is in millions. The cryptocurrency is what makes that possible,” he adds. “All organizational departments in this world will soon need to use cryptocurrency and blockchain.”
Charles goes on to state that every investment is a risk but this is a risk that’s backed by technology. Because blockchain is a transparent system, he echoes that it can present cheaper rates with more secure transactions and guaranteed transparency to all the parties involved.