Cryptocurrency Revolution Impact
The only dynamic force in life is change. The phenomenon of change is all-encompassing, therefore the financial world is not an exemption. Be that as it is, the new wave and frenzy of acceptance of cryptocurrency otherwise known as digital assets is a spectacular event in global financial space.
Despite the fact that cryptocurrencies are digital currencies that are managed through advanced encryption techniques, many governments have been very cautious of it fearing their lack of central control and the effects they could have on financial security .That was one of the reasons regulators in many countries had warned against embracing digital currencies with some going extra miles to take concrete regulatory measures to dissuade users.
However recently, there is a wind of change blowing, and blowing through many countries and financial authorities in the direction of having a second look at cryptocurrencies.
Hitherto ignored, spited and doubted by some conventional financial authorities, governments and business giants; the attention is now focussed on it by stakeholders in the financial world such as the World Bank and the International Monetary Fund (IMF) , Central Banks of some nations, among others.
Why the sudden growing interest and attention by the global conventional financial authorities if one may ask? It’s simply for the fact that cryptocurrencies work, are much more easy to use, transact, and much more transparent. The hitherto suspicion is giving way to positive curiosity and sincere intention to key into the flow.
The first probe into this financial scientific miracle that has caused a universal paradigm shift is to define the word, ‘cryptocurrency’ for the benefit of newbies.
A cryptocurrency is a digital asset designed to serve as a medium of exchange which makes use of strong cryptography to secure financial transactions , control the creation of additional units , and verify the transfer of assets. Its uniqueness is transparency. No room for any group to alter the transaction ledger for fraudulent activities nor is there an easy means of destroying the history of such transactions. It’s called a public ledger running on blockchain technology.
“Blockchain technology is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value ” -Don & Alex Tapscott , authors of Blockchain Revolution, 2016.
An unarguably ingenious invention, the blockchain is created by a person or group of persons pseudonymed Satoshi Nakamoto . Consequently, it has evolved into somethimg broader and greater even though it was originally designed for the digital currency, Bitcoin ; the multifarious uses of it is growing in recent times.
The technology allows digital information to be distributed but not copied, thereby ruling out autonomous custody or control of the information. Actually, the blockchain has created a new type of internet.
The blockchain network has no central authority as explained earlier, but a shared and immutable ledger making the information on it open for anyone and everyone to see. Therefore, it is very transparent , with every participant accountable.
Having established what the blockchain is, let’s have a look at the first cryptocurrency that popularises the technology or rather, the first digital currency blockchain gave birth to.
The Bitcoin, generally considered as the first decentralized digital money was released as an open source software in 2009 by Satoshi Nakamoto, using SHA-256, a cryptographic hash function as its proof of work (POW) scheme. Since then, over 4000 altcoins have been created. Several more progress have been made till date and many more creations have emerged such as an attempt at forming a decentralized DNS, making internet censorship very difficult. In April 2011, the effort yielded Namecoin, and soon after in October of the same year, Litecoin was released ; the first successful cryptocurrency to use script as its hash function instead of SHA-256. In the chain of other coins is found Peercoin, the first notable coin to use a proof of work (POW) / proof of stake ( POS) hybrid.
Today, the cryptocurrency has come to serve the world’s unbanked adult population market estimated at 50 Trillion dollars. Terra Foundation, the creators of Credit (CREDIT) analysis of the global unbanked adult population revealed the following – 94% of adults in high income countries said they had a bank account, while only 54% of those in developing countries did. The Middle East has the lowest proportion of account holders, with only 14% on average. 80% of adults in developing nations have smartphones and use mobile apps.
Terra Foundation further establishes that there is a low use of bank accounts in the developing world. In developing nations, the mobile money market is expanding, while only 2% of adults worldwide have a mobile money account, 12% of adults in Sub-Sahara Africa have one, half of whom have no other account.
Terra Foundation further found out that the countries with the highest dependency on mobile money solutions had the lowest usage of bank accounts. It concludes, ‘ It is worth noting that the most common reason for not having a bank account was that they did not have enough money and or the charges made it not viable to use a bank account over mobile money. Only 4% said they did not need one’ .
With cryptocurrency’s transparency, decentralization, sustainability, security, feasibility, user-friendliness and integration; financial revolution seems to be here to stay.