The price of Cryptocurrencies has over the last month surged with the most popular one Bitcoin trading at USD 2455.76 this week alone. Experts have been predicting the collapse of Bitcoin but the digital currency has been experiencing rapid growth over the last five years. In fact, bitcoin has experienced an overwhelming 500-fold increase over the past five years.
But why is Bitcoin gaining a lot of traction?
Well, you remember Wannacry, the ransomware that hit thousands of computers in well over 70+ countries potentially bringing businesses and government organizations to a halt? The creators of the ramsomware were demanding about $300 worth of ransom from their victims payable via Bitcoin. That incident no doubt has brought Bitcoin to a lot of people’s attention and inevitably had an effect on its overall value.
But more importantly, in April, the Japanese government officially recognized bitcoin as a legal method of payment. The country passed a law, following months of debate, that brought bitcoin exchanges under anti-money laundering/know-your-customer rules. This no doubt spiked the price of Bitcoin as more investors now gained confidence in the digital currency.
The majority of other countries in the world don’t officially recognize bitcoin as legal tender, but at the same time don’t forbid its usage with the exceptions of Bangladesh, Bolivia, Ecuador & Kyrgyzstan. You can read about Bitcoin’s legally worldwide here.
In Uganda, the government like most in the world is still skeptical of these cryptocurrencies. When One Coin opened shop in Kampala, Bank Of Uganda immediately issued a statement warning the general public about dealing with the company;
“Bank of Uganda warns the general public that whoever wishes to invest their hard earned savings in Cryptocurrency forms such as One-coin, Bitcoin, Ripple, Peercoin, Namecoin, Dogecoin, Litecoin, Bytecoin, Primecoin, Blackcoin or any other forms of Digital Currency is taking a risk in the financial space where there is neither investor protection nor regulatory purview. The public is hereby warned that whoever deals with “ONE COIN DIGITAL MONEY” does so at his or her own risk.”
Because Cryptocurrencies are fairly new to the market, there’s no regulatory oversight from the authorities and therefore protection which means the industry is currently operating much like the wild wide west. Bitcoin is at the stage where Mobile money was in 2008; there is a lot of risk and uncertainty with this financial vehicle as well as lot of optimism and speculation. The value of Bitcoin varies across different regions in the world. It’s mostly highest in Asian countries such as Japan and South Korea and nobody really knows yet how much bitcoin is really worth.
One bitcoin is currently trading at USD 2455.76 which is equivalent to 8,756,362.50 Ugandan Shilling. Companies such as BitPesa operational in Kenya, Uganda and Tanzania offer a way of buying bitcoin using Airtel/MTN/M-Pesa Mobile money networks.
A number of online retailers are now beginning to accept Bitcoin as a payment method. These include; Expedia, world’s largest online travel booking agencies, Newegg online electronics retail store, TigerDirect, another big consumer electronics retailer, Virgin Galactic, Microsoft on Xbox and Windows store, Wikipedia to receive donations, WordPress.com, Shopify.com among 100+ others.
There’s a lot of interest in using Bitcoin for international money transfers. The main advantage of course is that it’s cheap to store and transfer money using bitcoin. And how it works it that you purchase bitcoin in one country via bitcoin exchange, then transfer it to your account and then trade Bitcoin for your national currency where you deposit it to your receiving bank. iAfrika has a comprehensive list of how to buy bitcoin in Africa.
The value of Bitcoin and competing alternatives such as ethereum is expected to keep rising over the coming years according to industry experts. But in an unregulated industry, there are clouds of uncertainty and risk concerning the future of this new digital currency.