This series on Cryptocurrency is sponsored by StorsApp Pay otherwise known as Storspay. Storspay helps merchants send and receive payments in Bitcoin.
What is it about cryptocurrency
This month we will be discussing the interesting topic of cryptocurrency. A number of our listeners to this podcast show have written over the last couple of weeks asking me to cover this topic.
Before we go into the why cryptocurrencies are a thing let me explain what a cryptocurrency is. Cryptocurrency represent a form of money that can be exchanged digitally. They may be backed by fiat one to one in which case they are referred to as stablecoins or they may be mined on basis of proof of work like Bitcoin that rewards miners who solve complex problems with computing or proof of stake like Ethereum that randomly rewards miners based on what the amount of money they have staked . Ultimately irrespective of how they are mined or backed, the original promise of cryptocurrency is to enable decentralized exchange of value through a digital medium of exchange online. That digital medium of exchange is a cryptocurrency- also known as crypto for short.
Like other forms of value representations, not all cryptos are the same. For instance, some fiat currencies like the USD and Pounds Sterling are held in more regard than others. Same it is with crypto. Some cryptos like Bitcoin and Ethereum are held in higher regard as well compared to other cryptos. And just like different commodities in the real world serve different uses such as with commodities like gold, silver, grains etc., so it is with crypto. Different cryptos serve different uses as well.
What is it about cryptocurrency that has taken the world by storm over the last 4 years? Bitcoin was only invented in 2009. And it was only until 2017 that it came into popular consciousness. It had a run and crash in 2018 and then went quiet until late 2020 from whence it has now increased from $9K USD a coin to $56K. Another crypto the so-called meme coin – the Doge is all the rage at the moment with 11000% increase in price over the last 12 months.
Major companies like Paypal now allow users to pay in crypto and some major investment banks now provide exposure to their clients to the cryptocurrency asset class.
Coinbase a crypto exchange that Is less than 10 years, had a successful IPO and raised billions of dollars from public investors. For its price to have popped on first day of trading means investors are betting that it will make more money into the future. Coinbase makes money by taking a cut when people trade cryptocurrencies on its platform. So investors are betting that more and more people will trade crypto and that they will do it on Coinbase.
All this fuzz over a technology that is not even 20 years old?
Some argue that it is all a bubble driven by excess consumers savings arising from 1 year of pandemic-related stimulus spending and government benefits to households across the West. But this does not account for why Bitcoin rose to close to $20K from under $5K between 2017 to 2018 – pre-pandemic. Nor does it explain why Nigeria and other developing countries like Venezuela account for a large share of global trades in crypto even though the governments in these countries did not issue any large-scale public stimulus or benefits. In fact, for those people in Venezuela and Zimbabwe – countries that are facing hyperinflation- who earn on the internet prefer to be paid in crypto. They then exchange their crypto for local currency to met their daily needs. In absence of this crypto alternative, their entire month’s wages if paid in local currency could be worth nothing in just the next second.
In my short lifetime, this new crypto era reminds me of when the internet became a thing in Africa in the early 2000’s. It is the same feeling I sense with this new crypto era. Then the internet’s promise before it became mainstream and government regulated was that it was boundless. You could do anything with it. You could be anyone with it. You could meet anyone from anywhere in the world. You could find a lover from anywhere in the world even if your whole village hates you. You could sell and buy anything from anyone from anywhere across the world. You could find and apply to any school even if you were in a remote village in the middle of no where. You could find any book, any movie, any game and read , watch and play it by yourself or with your friends and even strangers. The feeling was one of freedom. Liberating boundlessness.
This same feeling of liberating boundlessness is what I sense that the new craze about Crypto represents. The boundless freedom to spend and earn in a currency that your local government -competent or not – has no control over. The fact that you can trade with, pay to and get paid from anyone from anywhere across the world. To be free is to not be bound to my own devaluing local currency where my wealth and financial freedom is dependent on the degree of mismanagement of my local politicians. It is the freedom to protect my wealth from inflation and unfair taxes from government policies that are not in sync with my dreams. This is the promise of Cryptocurrencies and why they are such a thing.
What it is about cryptocurrency is that it represents the fundamental human hope to be in charge of our own financial future and to be able to trade with anyone no matter where they are in the world. To not be bound by imaginary borders and staid ways of doing things that have no place in today’s future where humanity is bound to be one.
Crypto helps the internet fulfil its promise of a boundless world where we can exchange our gifts with anyone across the world and get paid for it without having to deal with middlemen like banks and government who take their own share for doing nothing.
So long as people believe in their inalienable right to fulfil their potential by engaging and trading with others globally and so long as they resent mismanagement by middlemen, there will always be a need for cryptocurrency.
And what is exciting is that the crypto era is just starting. Anyone can be an expert in this new era. And you will do well to educate yourself about this amazing technology.
In our next episodes we will explore the subject of cryptocurrencies in more detail. If you have any questions that you will like us to address over the next 3 episodes, send me a voice note through the link for feedback on the podcast. If you want us to feature anyone to discuss this topic let me know too.