Bitcoin

Kwa wenye ujuzi, what exactly is bitcoin???

  1. Is it an asset? An asset, by definition, is anything that generates a cash-flow return. According to Robert Kiyosaki, an item can only be regarded as an asset if it provides cashflow to you e.g a house provides rent, stocks offer dividends and bonuses, a matatu generates cash daily etc. What exactly does bitcoin generate??
  2. Is it a currency? If so, there are 8 characteristics of a good currency. General acceptability, portability, durability, homogeneity, divisibility, malleability, cognizability and stability of value. Of particular interest is “stability of value”…how stable has bitcoin been in the last two years???With supply capped at 21 million coins, and demand rising, stability is obviously a pipe dream. Bitcoin fails the test as a currency because it is extremely volatile.
    In my own layman’s analysis, bitcoin in itself does not meet the threshold of a currency (it is volatile and transactions take long to process), and does not fit the description of an asset (it does not produce any cashflow). Like many other bubbles, such as the dotcom bubble, people will make a kill from it but late-comers will get fried as always. In my opinion, what’s valuable in bitcoin is the technology behind it, not the coin itself. The blockchain, and decentralized ledger can be applied across many fields and is probably a disruptive technology. My two Zimbabwe dollars:confused::confused::confused:

Following this cryptic language

Good question. waiting for answers too. no links please, local examples if possible.

Compare with the Kenya shilling.
Is the shilling an asset? Yes sir. You can keep it in a bank and you will earn interest, you can trade it against other currency and you can earn from capital gains.
Is the shilling a currency? Yes sir. Is it stable, now it is, but go back 20yrs uone mazinga-umbwe

A recent article (November 29th 2017) by Seth Archer in the Business Insider titled “Goldman Sachs says bitcoin is a commodity” offers an interesting perspective. Other sources claim that bitcoin is a commodity like gold because it has uses (mostly storing illegally acquired funds) and has a limited supply. My only concern about bitcoin being a commodity is that the technology behind it is now public knowledge as demonstrated through Satoshi Nakamoto’s white paper. Since that white paper was made public, there are hundreds of new cryptocurrencies, mostly based on the same technology. If a commodity has many cheap substitutes, its price is bound to fall. If indeed bitcoin is a commodity like oil or coal, whose use is to engage in sinister activities such as gambling, illegal businesses etc, it will be shortlived because it is not a monopoly. Competition (other cryptocurrencies) will catch up and its price will decline. It is a demand and supply mechanism that works on all commodities that are close substitutes. If the price of wheat flour rises, you buy more rice because they are both food. The same can be extrapolated to cryptocurrencies.

The writer nailed it. There have been instances where bitcoin has been used to conduct illegal activities.
It’s true there are many cryptocurrencies out there, even Goldman Sachs is working on launching theirs. Hii ya Wall Street ndio nitanunua.

Bitcoin in its current form is mearly a vehicle for speculators. Even though people call it a “cryptocurrency” I dont think imefika a point where considerable number of people use it for economic transactions. Most people who own bitcoin now are hoping for its value to rise so they can sell at higher prices thus speculation. However some people are really hoping that bitcoin grows in adoption and permiates the world economic system so that it can be sort of a reserve currency. Some serious institutional investors like Goldman Sachs and even the IMF have become really interested in bit coin.
But here is the kicker even though bitcoin may one day become widely adopted by the economy it has competition from other cryptos like Ethereum. So people are still weary that it may fall by the way side or be passed by competition. As it is bitcoin is a very volatile asset class with no support that is afforded to other financial instruments.
Though there is still hope for it in november USA regulators approved trading of future contracts underwritten by bitcoin. The bitcoin exchanges (markets) have been beefing up cyber security so that we dont have denial of service attacts that have been seen in previous years. So on that front there is definately a light at the end of the tunnel.
Leaving the cryptos alone the underlying technology of blockchain is where the real juice is. I cannot begin to tell you how exited I am nimeanza hata kujifunza programing ya blockchain systems.
It has the potential of getting rid of nearly all brokers in financial contracts. Its like the internet of value imagine: 1.Peer to peer lending no banks.
2.Creatives eg Song writters Movie makers can sell directly to customers.
3.Watu wa patents na Lands govt can just adopt a blockchain systems n these things mnafanya bila kuenda govt offices.
4. Lastly but not least na hapa ndo the most exiting for me. SMART FUCKING CONTRACTS these are self actualizing contracts which carry out obligations of contracts once conditions are made: Think of the possiblities for people who work online for Over the counter financial instruments. Thats a great future.

All in all wacha tujipange because "The Sun shines on those who stand for it before it shines" Igbo saying.

Ni hayo kwa sasa.

Nailed it