You might have noticed the ever, growing hype on cryptocurrencies with more reference to bitcoins, over the last one year or so, both locally and globally.
While the majority thinks the definition of cryptocurrencies is bitcoin, the fact is, bitcoin is one of the many existing cryptocurrencies.
I, personally, have seen many ads for various seminars conducted in Tanzania by so called “bitcoin trainers,” although I have not attended any.
This has continued to bring about awareness much as this created awareness created worries me and I will discuss these worries later in this article.
But first, let us establish where and when these cryptocurrencies emerged and at least understand who were the pioneers and their intentions or motive in creating them.
The origin of Cryptocurrencies:
In 2008, Sutoshi Nakamoto, in his announcement, said he created a Peer-to-Peer electronic Cash System, (Sutoshi Nakamoto still remains a mystery).
He said he had a goal of inventing something that many had failed to establish in digital Cash, hence announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending.
The system is completely decentralized with no server or central authority. – Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
There have been multiple attempts to build centralised electronic cash systems, until this invention of the mysterious Sutoshi Nakamoto of Bitcoin using Peer-to-Peer network file sharing.
This, in essence, is the decision that gave birth to cryptocurrencies. So what is the definition of Cryptocurrencies?
This is the same as normal transactions. It is an embedded technology which entries pass and are fulfilled in a database with specific conditions and where no one can change; that sounds like a normal banking right? Believe me, it is.
Reading from above, you must have realised that Cryptocurrencies existed from 2008. Then why most of us found out about them few years ago?
Back then, cryptocurrencies were available to only a few people, those who could use technology to mine cryptocurrencies, using the system and transfer or exchange within peers in the network through the use of p2p process.
And because, from Nakamoto perspective, bitcoins were introduced as means of exchange between peers, the value was negligible.
However, from increased awareness in trading activities, gradually activities started to pick and with some terming it as bubble, especially when bitcoin hit record $20,000.
Now why worry?
Well, it depends on how you look at it. For those who participate in trading sessions, they are somehow safe, trading requires a skill set of proper technical analysis of the trends.
And this is where my worry comes in, and the main reason is that the majority of seminars conducted with regards to bitcoin trading, only talks upside and tend to, purposely, ignore or hide facts that there is huge potential of one suffering capital loss should you not be very conversant with technicalities.
And in most cases, these trainers do come to developing markets, selling their trading platforms, and either way, they stand to win.
Rapidly, we have also witnessed some kind of ponzi schemes that are taking shape very fast.
The ponzi schemes target those with no skills in trading, with a promise that they invest in certain schemes and that they would, in the end, benefit from wealth accumulated by the scheme and through the onboarding of new members.
In my opinion, these should be avoided and awareness needs to be raised. Yes, we can discuss a lot on this subject.
But my favourite punch line, with regards to this subject is, when you invest through a bank, regulator is known and recovery is easy.
However, what if you wake up tomorrow and your bitcoin account has Zero balance? What would you do?
Arafat A Haji,- Head of Treasury & Global Markets, Eximbank (Tanzania) Ltd