History has exhibited that many of the economic advancements have been in synchronisation with global trends and world events. After World War II, the global economy was in immediate need of a new financial system. The gold standard was too rigid; at the same time, with an inflationary alternative, economists were concerned that countries could devalue their respective currencies to boost exports. On July 1st, 1944, representatives from the United States, Canada, Western Europe, Australia and Japan established the Bretton Woods monetary system, where the respective currencies of the participating states were linked to the US dollar, and the US dollar was linked to gold. In the Summer of 1971, President Nixon announced the end of the Bretton Woods standard. Since which, monetary systems have been sequentially, adapting, growing and evolving. …


History has exhibited that many of the economic advancements have been in synchronisation with global trends and world events. After World War II, the global economy was in immediate need of a new financial system. The gold standard was too rigid; at the same time, with an inflationary alternative, economists were concerned that countries could devalue their respective currencies to boost exports. On July 1st, 1944, representatives from the United States, Canada, Western Europe, Australia and Japan established the Bretton Woods monetary system, where the respective currencies of the participating states were linked to the US dollar, and the US dollar was linked to gold. In the Summer of 1971, President Nixon announced the end of the Bretton Woods standard. Since which, monetary systems have been sequentially, adapting, growing and evolving. …


The religion of Islam was founded in the 6th century in an Arabian land, today known as the Kingdom of Saudi Arabia. The faith is sourced through a coupled set of scriptures — the Quran and Sunnah; for former is accepted as the verbatim word of God, narrated through the Arch angel, Gabriel, to the founder of Islam, Mohammed; the latter is a recorded collection of verbal narrations and physical actions that characterise the prophecy, referred to as the Sunnah. Collective records of the Sunnah, or traditions, are referred to as hadiths.

Fourteen centuries later, adherents of the religion use the above-mentioned resources to facilitate understanding and aid practice. However, given that there is no unanimity of agreement amongst the Islamic community, the natural response is to question what is authentic and what is not. The large variation of beliefs within the community is evident of the inaccuracies and inefficiencies of the religion’s conveyance. …


Last year was phenomenal for the cryptocurrency market; the market capitalization increased by more $USD 550 billion. Initial Coin Offerings alone raised in excess of $USD 6.5 billion. Cryptocurrencies and blockchain technology have revolutionized fundraising through token sales. The question that arises from such growth is, why are tokens so valuable? How do tokens find intrinsic value? What benefits are offered to token holders? More often than not, like most exchange-traded assets, tokens are seemingly purchased for speculative gains, with little reason for purchase founded through the token’s functional utility. Utility tokens often provide the owner with a license extending access rights to a platform or protocol; no legal or economic rights are offered to holders. …


The emergence of cryptocurrencies has made it possible for many individuals to amass fortunes; by extension, companies are now able to raise millions of dollars by way of crowdsales. Such prospects have made cryptocurrencies far more attractive than traditional investments. Moreover, retail investors are now entering the market, many of whom have little experience investing.

In a recent study, Research group, Partech, found that African FinTech startups raised in excess of $366.8 million in 2016 by way of venture capital, with Nigeria ($109.37 mil), South Africa ($96.75 mil), and Kenya ($92.70 mil) accounting for the majority of the raised capital. Africa is only just emerging as a serious player in the world of venture capital; it shows no signs of slowing down. Yomi Kazeem, Quartz Africa, suggests that many of the western VC firms are seeking to disrupt the currently existing leverage-based financial infrastructure in their respective localities; whereas, in Africa, many gaps in such regard are yet to be capitalized on. The smartphone market is seeing increasing adoption in Africa; the price of mobile phones and data is gradually decreasing. There is a potential market of 2.5 billion people, many of whom are unable to make such purchases due to high costs and low wages. …


Not too long ago, Gold was recognised as a financial currency — an economic means of payment. This paved the way for the gold standard, a principle where paper value is back by the intrinsic value of an underlying asset. Banks and governments could only print notes if they possessed an underlying supply of gold to back the printed value.

In 1914, following the beginning of the First World War, the British, French and German governments abandoned the gold standard; artificial value was printed to fund the war. Otherwise, the violent dispute would have concluded upon the depletion of Gold. By way of such manipulation of money, artificial value lead to economically-implicating deficits. …


In recent years, cryptocurrencies and Blockchain technology have attracted controversy from financial institutions, the media and the wider community. Last year saw phenomenal growth; the cryptocurrency market capitalisation grew by more than 1,200%, coupled with which, start-up projects raised in excess of $5.6billion through Initial Coin Offerings. The natural extension of such growth is to question what the future holds for this newly-found asset class. Is Blockchain technology revolutionary? Are cryptocurrencies a threat to the fiat currency market? Most importantly, do cryptocurrencies display the financial characteristics to suffice as transactional tender?

Bitcoin and other cryptocurrencies display the attributes of good money. Let us consider Bitcoin. It is scarce; the maximum supply is limited to 21 million. Given the transparent nature of the Blockchain, we are able to determine what the total supply is today, tomorrow and even in 10 years from now. With fiat currencies, this is an impossibility; central banks have no means of determining the current supply of funds in circulation. Economic policies that are yet to be found and implemented further-distort speculation. Bitcoin is easily divisible; the cryptocurrency can be cut and divided into tiny fractions, all of which are identical, and recombined at will. Furthermore, Bitcoin transactions are recorded as a ledger entry on the Blockchain. The ledger entries are backed up on thousands of computers around the world. If the internet went down, most means of value transfer would suffer; namely, PayPal, Internet Banking facilities, etc. Bitcoin isn’t different in such regards, and thus, it isn’t a weaker choice of value transfer. In addition, Bitcoins are fungible; each Bitcoin is identical in nature, each of equal value. Bitcoins are also durable; they cannot be destroyed. Bitcoin is recognisable; each Bitcoin wallet can attest authenticity. Unlike gold, which can be filled with Tungsten, Bitcoin cannot be counterfeited. Bitcoin can only be created by way of mining. Bitcoin is highly portable; it can be sent anywhere in the world at negligible costs, which automatically adjust as per the current value of the cryptocurrency. It has no physical weight nor any recognition of geographical borders. It cannot be physically controlled. Given the decentralised nature, its value is determined solely by the free market; no permission is needed from any third party; it is uncontrolled. It perpetuates economic freedom. Programmability, something that is impossible with fiat, is a vital quality for today’s digital age. …

About

Faisal Bhatti

Cryptocurrency writer. Finance manager. Gym addict. Hip-hop lover. Vegetarian. Adrenaline junkie. Book worm. Student. Poet.

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