Virtual currency, Bitcoin is said to be gaining huge popularity worldwide and mass adoption. Botswana is not immune to this controversial investment vehicle. While it may be trendy, many pundits warn on its safety.
Initially, Bitcoin faced a lot of criticism from each part of the world and was considered to be a scam due to its several negative factors. But over the time when experts from various sectors started examining Bitcoins, they understood the power of digital currencies and started to look it in a positive way.
Mphoeng Mphoeng who is a University of Botswana Lecturer in Accounting and Finance recently at the Barclays Economic outlook forum shared his learnings on blockchains.
Mphoeng says companies are now able to raise money without going through the stock exchange, no need for prospectus and raising capital and crowd funding becomes easier. It does not take time to verify information, the processing in times to pay becomes a lot faster. Stock and bond trading, you don’t need to be on a centralized system, that’s how big blockchains are. It can be used for health, voting.
One of the problems with the blockchains at an utopian level is that there is no regulation, and where there is no regulation there are a lot of scams. For every 100, probably 90 of them are scams.
“The regulators need to sit around and find out how they are going to deal with it rather than saying you use your money at your own risk. Saudi Arabia and China are currently looking at that. A big problem with no regulation is money laundering; there is no need for identification. Money is able to move without people knowing,” he cautioned.
He says that, even though the central banks are still behind in this regard, “you cannot stay behind; this is coming and is going to change the world. If you are going to invest in bitcoins, one needs to be proactive in investing in cypro currencies. This is going to shoot through the roof.”
Botswana Stock Exchange, Chief Executive Officer Thapelo Tsheole explains to Sunday Standard that the stock market has its own evolution and; product innovation is continuously taking place concerning instruments of investment.
He therefore highlights that, as Stock exchanges including BSE “we always get ourselves ready for any innovation which is acceptable to us. Of course some innovation cannot be taken to the stock market at all, so we are continuously working on that aspect. With Blockchain definitely stock exchanges are going to end up having to use that technology to invest in stock market.”
Motswedi Securities analyst, Garry Juma does not subscribe to Bitcoin investment. “I feel that people should be discouraged from investing in Blockchain, as they are too risky and a bit complicated.” Considering the Bitcoins, Juma says that there are many fake Bitcoins. He further notes that when one invest on something they need to understand what they are getting themselves into.
Bank of Botswana recently said that crypto currencies are not legal tenders.
“We are watching what the world is doing. As it stands, no central bank or reserve bank have issued crypto currency as a legal tender”, said Dr Tshokologo Kganetsano, Director in the Research and Financial Stability Department.
KNOWING THE ADVANTAGES AND DISADVANTAGES OF BITCOINS
Studying the advantages of Bitcoins- transactions are completely anonymous and private. Unlike in payments through bank, where the transactions can be tracked and identified, bitcoin transactions cannot be identified. A person can only know the addresses of bitcoins on which the payment has been sent and received. But to whom these addresses belong cannot be identified. It’s like payment to a particular bank account can be tracked but to whom these accounts belong cannot be known. ( but if a person uses same bitcoin address for every transaction for a long period of time, there is possibility that the person can be tracked).
Paying through bitcoins provide the utmost freedom. Bitcoins can be sent to any person in any part of the world. No intermediaries in between. No bank holidays/strikes. No boundaries or borders. No payment limit.
Paying through Bitcoin has very low and sometimes no transaction fees at all. It all depends on the priority of the person.
Bitcoin transactions are secure, irreversible, and do not contain any customers’ sensitive or personal information. This protects merchants from losses caused by fraud or fraudulent chargebacks.
Bitcoin transactions are very fast if compared to banking channels. A Bitcoin transaction is as fast an e-mail and can be processed within 10 minutes. Also it can be instantly processed if they are “zero-confirmation” transactions, meaning that the merchant takes on the risk of accepting a transaction that hasn’t yet been confirmed by the Bitcoin. Bitcoin has very low transaction fees even for being super fast in terms of processing.
Government cannot take back your Bitcoins as it is decentralized and no one has control over it. The maximum is that the government can ban it but still your Bitcoins has some value in those market/places/regions where it is still legal and thus can be cashed.