By: CPA Meshack Mutinda Mulei
It Can Change the Way We Think About and Use Money
Cryptocurrency and Blockchain technology have been creating a significant impact in the financial world in recent years, and for good reason. These revolutionary technologies have the potential to completely change the way we think about and use money.
One of the major players in the cryptocurrency space is Bitcoin, the first and most well-known cryptocurrency. Bitcoin, which emerged in 2009, was developed by an unidentified individual or collective entities using the pseudonym Satoshi Nakamoto. It operates on a decentralized, peer-to-peer network, and allows for fast, secure, and borderless transactions. Despite some recent volatility, Bitcoin has seen a steady increase in value over the past few years, with a market capitalization of over $1 trillion and a price of around $35,000 in January 2021.
Another major cryptocurrency is Ethereum, which operates on its own blockchain network. Ethereum is different from Bitcoin in that it allows for the creation of decentralized applications (dApps) on top of its blockchain. This has led to the development of a wide range of decentralized finance (DeFi) applications and projects, which are changing the way we think about traditional financial services. Ethereum’s market capitalization is around $250 billion as of January 2021, and its price around $1300.
In addition to Bitcoin and Ethereum, there are many other popular cryptocurrencies such as Ripple (XRP), Bitcoin Cash(BCH), Litecoin(LTC), Binance Coin(BNB) and Dogecoin(DOGE). Each of these has its own unique features and use cases, and all have experienced diverse degrees of success within the market. Ripple (XRP) has market capitalization of around $16 billion and price around $0.6. Bitcoin Cash(BCH) has market capitalization of around $7 billion and price around $600. Litecoin(LTC) has market capitalization of around $9 billion and price around $175. Binance Coin (BNB) has market capitalization of around $5 billion and price around $50. Dogecoin(DOGE) has market capitalization of around $8 billion and price around $0.08
Blockchain technology, the underlying technology behind cryptocurrencies, has a wide range of potential applications beyond just digital currencies. Once a block is added to the chain, it becomes an immutable record containing a list of transactions that cannot be altered. This creates a tamper-proof, secure, and transparent record of all transactions made on the network.
One of the key features of blockchain technology is its high level of security. The decentralized nature of the technology means that it is not controlled by a single entity. This enhanced level of security significantly increases the difficulty for hackers to compromise the system. Additionally, the use of cryptographic algorithms and consensus mechanisms such as Proof of Work (PoW) or Proof of Stake (PoS) makes it almost impossible to tamper with the data stored on the blockchain.
The security of blockchain technology is further enhanced by the use of smart contracts. Smart contracts are contractual agreements that are encoded with predefined terms and conditions, automatically executing actions based on those terms when specific conditions are met. This ensures that once a contract is agreed upon, it cannot be altered without the agreement of all parties involved.
For example, it has the potential to revolutionize the way we think about financial services by enabling faster, cheaper, and more secure transactions. It has a wide range of potential applications beyond just digital currencies. For example, it has been applied in various sectors around the world such as:
In the supply chain management, companies like Walmart and IBM are using blockchain to track products from the manufacturer to the store shelves, helping to improve transparency, reduce costs, and increase efficiency.
In the voting systems, countries like West Virginia and Russia are using blockchain technology to improve the transparency and security of the voting process.
In the real estate, companies like Propy and ShelterZoom are using blockchain to digitize and automate the property buying and selling process, making it faster, cheaper, and more secure. In the healthcare, companies like Medicalchain and SimplyVital Health are using blockchain to securely store and share patient medical records, improving the efficiency of the healthcare system.
In Africa, blockchain technology has been deployed in several countries, including South Africa, Ghana, and Nigeria. In South Africa, there has been a notable adoption and utilization of blockchain technology in the financial services sector for cross-border payments, digital identity verification, and asset tracking. In Ghana, blockchain technology has been used to improve the transparency and efficiency of land registry systems. In Nigeria, blockchain technology is being used to improve the transparency and security of the voting process.
In Kenya, the Central Bank of Kenya (CBK) is taking steps to enable the use of blockchain technology in the financial services sector. The CBK is currently working on developing a regulatory framework for digital assets and has set up a task force to explore the potential use cases of blockchain technology.
Despite the potential benefits of blockchain technology, there are also some potential drawbacks to consider. One of the biggest challenges is the lack of clear regulations and laws around the use of digital assets and blockchain technology. This can create uncertainty for businesses and individuals looking to use these technologies, and can make it difficult for them to comply with existing laws and regulations. Additionally, blockchain technology is still relatively new, and there is a lack of understanding and expertise among individuals and organizations in Africa.
In conclusion, Cryptocurrency and blockchain technology have the potential to change the way we think about money and financial services. Bitcoin and Ethereum are some of the major players in the crypto market, with significant market capitalization and value. However, there are many other popular cryptocurrencies each with its own unique features and use cases. Blockchain technology has a wide range of potential applications beyond just digital currencies, and it can revolutionize the way we think about financial services. The Central Bank of Kenya is taking steps to enable the use of blockchain technology in the financial services sector but still, laws and policies are needed. Kenya has the potential to greatly benefit from its implementation. It is important for the government, private sector and individuals to understand the potential of blockchain technology and work together to overcome the challenges and fully realize it’s potential.
CPA MULEI, MBA, Bcom, CISA