Head of Bitcoin Foundation cautions people not to invest more than they can afford
As billions lack access to formal banking, mobile money is getting increasingly popular. In Africa, more users are taking to Bitcoin. It is getting particularly popular in Nigeria, South Africa and Kenya. The crypto currency has lot of potential in countries with volatile economies.
However, the head of Washington-based Bitcoin Foundation, Llews Claasen sounded a note of caution, urging people not to invest more than they can afford in the crypto currency. He was speaking at the TEDGlobal conference in Tanzania regarding the potential of Bitcoin in Africa. Bitcoin Foundation is a non-profit organisation that promotes the use of Bitcoin around the world. The crypto currency relies on blockchain, a digital technology that records every transaction.
Mr Claasen said,
“It offers people a chance to protect their savings from government abuse of monetary policy.
“A lot of people in Zimbabwe are interested in it as an alternative financial system, but that is not an easy thing to do formally as we don’t want to be perceived as wanting to disrupt economies,”
he told in an interview.
He said that the tokenisation of crypto-currency could also have a big impact on Africa. Under tokenisation of crypto currency, rights to an asset are converted into a digital token on a blockchain.
“It means a small business owner can tokenise shares in his business so investors do not have to go through a central intermediary or register their shares.”
He said that it would make it easier for investors to put money in and take it out of businesses. However, he agreed that Bitcoin, in its present form, is not a great alternative to cash. But added that network upgrade would make mobile-based transactions easier. The upgrade would be done in the next six to twelve months.
“Currently the network has a transactional input of three to four transactions per second, which isn’t great if you want to use it as cash.
“But once the upgrade goes live, effectively there will be no limit to the transactions the network can handle.”
Recently, the value of one Bitcoin touched 4,500 (£3,470), the highest all-time value.
“To be honest Bitcoin is not a great form of cash right now. Don’t think of it as cash, think of it as a digital form of gold that enables you to save outside of the current financial climate,”
“They read an article about it which may or may not be true and make decisions about its long-term future, and that is why we have extreme swings,”
He said that in the future, there would be two currencies for everyone – one would be the local currency and the other would be the crypto currency. He dismissed an EU report sometime back that suggested misuse of the crypto currency in the form of tax evasion and money laundering. The report had cited the potential criminal use of bitcoin because of the anonymous nature of the blockchain-based currency.
“It found that there was not a lot of large-scale criminal behaviour,”
“Bitcoin is not completely anonymous and it is fairly easy for someone, say a revenue officer, to work backwards to find who was responsible for a transaction.”