• By admin
  • February 18, 2024

The Age of Crypto

The Age of Crypto

The Age of Crypto 1024 683 OBG VIRTUAL OFFICE

“Hey man. How’s the going?” reads the WhatsApp message that pops up on my screen, as I digest Owaahh’s provocative article titled “A Man Who Sold A Country” on Adobe Acrobat Reader. Playing in the background, from the Bluetooth speaker, are the sweet vibes of Kato Change’s guitar. The messages that follow divide my attention, as I shift from one App to the other. The sender is Ali Mongi, an IP consulting engineer who had just jetted back into the country after completing a project in Brazzaville, for a multinational corporation. One key word had featured severally in our chat history for the past couple of weeks.

“You still want to know more about crypto?” The last message reads, “I’m free tomorrow afternoon. Can we link up and do the interview?”

I agree and propose the exact time and venue. He then asks me drop the location pin since he has

never heard of it. So I do.

Honestly, I couldn’t think of a better place in the city that offers a quiet environment for interviews, board meetings, seminars and video conferencing at affordable rates, in addition to free internet and coffee/tea.

See you kesho,” is how I end the chat after confirming my space reservation.

We meet the following day at 2.30pm at OBG Virtual Office and get right into it.

What is Cryptocurrency?

It’s simply a virtual digital currency; pretty much like cash for the Internet. It’s an alternative currency to paper money.

How did it come into existence and for what purpose?

The first cryptocurrency was BITCOIN. Its origin is not well-known but it was first described in 1998 by Wei Dai. Proof of its concept was published 11 years later, as open-source software, by someone who goes by the pseudonym, “Satoshi Nakamoto.” The idea behind its invention was to move away from conventional money: Create a new form of money that uses cryptography to control its duplication and transactions, rather than a central authority. It was believed that the digital currency would restore some kind of balance in global wealth distribution. Nobody owns the bitcoin network but it’s fully operated by its users around the world. And like any other currency, its value comes only and directly from people willing to accept it as payment. Bitcoin is generally considered to be the first open-source and decentralized crypto, however, over 4,000 alternate variants (altcoins) have emerged since its release.

You mentioned cryptography as the process by which cryptocurrency is created and controlled. Could you explain how this concept works?

Cryptography is essentially the art or practice of encrypting data or information. It involves constructing and analyzing protocols that prevent third parties or adversaries from reading private messages. In the ancient times, it was used in transposition cyphers to rearrange the letters in messages. Fast-forward through the centuries and you find incredibly complex computers encrypting data in more complicated ways than ever witnessed before. Most cryptocurrencies use hashing (a method of cryptography that converts any form of data into a unique string or text) to secure transactions, control the creation of additional units, and verify the transfer of assets. All these tasks rely on public key cryptography (a combination of public and private keys). Basically, a public key gives you an address to send money to, whereas a private key unlocks the public key to enable you to receive the money that has been sent. Public key cryptography has revolutionized the online payment industry. It has also made it possible to trade anonymously in the crypto universe.

Wow! I feel like I’m taking a crash-course right now. I hope the bell-ringer is asleep.

Hahaha. Of course, you can always read a beginner’s guide if you want to learn to learn more or understand better. Countless books have been published, in the past few years, on the subject. Howbeit, I’d recommend “The Age of Crypto: How Bitcoin and Digital Money are Challenging the Global Economic Order” by Paul Vigna and Micheal Casey, for anyone starting out.

I’ll definitely check it out. So what determines the price of a cryptocurrency?

Just like any other commodity consumed in the market, the price of a cryptocurrency is determined by demand and supply. When demand increases, the price goes up, and when demand falls, the price falls. Take bitcoins, for example; there is a limited number in circulation, about 21 million, and new bitcoins are created at a predictable and decreasing rate, which means that demand must follow this level of inflation to keep the price stable. Bitcoin is still a relatively small and volatile market, therefore it doesn’t take significant amounts of money to move the market price up or down.

Do you believe that digital currency will become the dominant medium of exchange in the near future or is there a possibility that cryptocurrency will eventually become worthless?

The future of digital currency depends on legislative policies. Since its inception, cryptocurrency has had a displeasing reputation, mainly because it was prevalently used in the now-defunct black market (“Silk Road”) by drug cartels. However, the technology and security features have improved significantly over time, and continue to do so. Due to this, there’s reason to believe that progressive governments will accept it as an alternative currency and find logical ways of taxing cryptocurrency gains. Keep in mind that history is littered with failed currencies that are no longer in use. Most of failures can be attributed to the crippling effect of hyperinflation, which cryptocurrencies are “immune” to. Be that as it may, you can never write off political issues or the possibility of a better form of currency than cryptocurrency, being invented. At the moment, bitcoin is, undisputedly, the most popular decentralized virtual currency but there’s no guarantee that it will retain that position.

If most countries in the world were to legalize the use of cryptocurrency, how do you suppose it would be regulated?

First of all, attempting to assign special rights/authority to any organization to govern the global cryptocurrency network, is not a practical possibility because of the blockchain. Blockchain is a system of decentralized computers that moves chunks of data securely through an online ledger which contains blocks (every transaction ever processed), allowing a user’s computer to verify the validity of each transaction. Each block is immutable and cannot be changed or edited without a consensus algorithm …

Sorry to interrupt, but what’s the difference between cryptography and blockchain?

Okay, I’ll try not to be too technical. Blockchain is the public ledger that holds all transactions from the genesis of a cryptocurrency (the token traded). And it’s called “CRYPTO – currency” because cryptography is the process used to secure the validity of entries made on the blockchain. Understood?

Yes. Continue.

So, due to the decentralized nature of cryptocurrency trading, no government or global body can sustainably invest in all the mining hardware that can control all the computing power of the network. I’m sure you’re wondering what mining is?

Well, I know exactly what mineral mining is. But kindly do the necessary …I’m your student today.

Mining is the process of computing transactions to secure the network and keep everyone in the system synchronized together. It is referred to as “mining” (an analogy to mineral mining) because it is also a temporary mechanism for issuing new cryptocurrencies, but unlike the physical activity of extracting valuables from the earth’s crust, it provides a reward in exchange for useful services required to operate a secure payment network. It’s what I’m actively learning at the moment.

Now back to regulation: I think such an attempt would be like going down an infinite rabbit hole. Nevertheless, regulations can be imposed on numerous uses of cryptocurrency by stipulating what is considered legitimate or not, as per each country or state’s jurisdiction. Needless to say that any regressive government, that completely bans the use of cryptocurrency, could stifle the development of its domestic businesses and markets, consequently shifting innovation to more liberal countries.

As a cryptocurrency investor and enthusiast, what are some of the benefits you’ve come across so far?

The biggest advantage of using cryptocurrency is obviously payment freedom; you can make payments without reliance on a third party. In addition to low barriers of entry, users are fully in control of their money and cannot receive unapproved charges, as is the case in credit card fraud.

Moreover, anyone, regardless of their social class, can send and receive cryptocurrencies anywhere in the world, at any time. Transaction costs are generally very low, depending on the cryptocurrency, and they are unrelated to the amount transferred. Also, as I said earlier, the transactions are secure, irreversible and anonymous (don’t contain sensitive/personal information pertaining to users). Furthermore, users can protect their money with backup and encryption, and no party can manipulate the cryptographically secure network protocol – blockchain acts as public proof that a transaction took place, which can potentially be used in a recourse against frauds. All cryptocurrency transactions can be transparently consulted in real-time by anyone.

For the record, it’s possible for millennials, like you and I, to start trading with the pennies in their pockets and end up “lamboing” their way into the Forbes list, within a relatively short period of time compared to someone trading stocks and options at the bourse. Ian Balina’s success story as a blockchain and cryptocurrency investor, among others, has inspired me a lot since I started.

Why am I getting the feeling that you probably have impressive figures in your cryptocurrency wallet? Are you a bitcoin millionaire (Bitmillionaire)?

Hahaha. Nah! I haven’t struck oil yet. I joined the bitcoin party a bit late; prices were already on the roof when I came in. However, I’ve invested in altcoins, mining, and I’m constantly taking carefully calculated risks in Initial Coin Offerings (ICOs). I’m in it for the long run rather than short-term price speculation. Presently, I’m what they call a “Hodler,” in the cryptocurrency universe. I won’t say what I have in my wallet applications right now, because it is not much. But it’s sufficient to buy designer clothes and shoes or even head for a vacay in Santorini …


Hahaha. Relax! I’m just blurting my wishes out loud. I haven’t reached “baller” status yet. Hopefully, once cryptocurrency becomes mainstream, I’ll not only be able to pay for my rent with digital coins, but also my dream holidays.

You mentioned ICOs. Are they like IPOs?

Yes. They are the cryptocurrency equivalent. But unlike IPOs, they are used by startups to bypass the rigorously regulated capital-raising process required by venture capitalists.

Are there any setbacks you’ve encountered thus far? Or has it been all flowers and rainbows?

It’s been more like day and night. Setbacks will always be there, no matter how good a concept is on paper. First, the degree of acceptance is still low. Going forward, more individuals and businesses adopt digital currency because they want to take advantage of all the benefits that come with it. Unfortunately, there’s still a lot of fear, uncertainty and doubt (FUD), that’s still making the majority of the population hesitant to take the leap. The total value of cryptocurrencies in circulation and the number of businesses that have adopted is still low and far from reaching its potential. The market still needs to grow in order for users to fully benefit from the network.

A few months back, the US Securities and Exchange Commission (SEC) rejected the Winklevoss twins’ bid to create a bitcoin Exchange Traded Fund (ETF), for the second time, citing concerns that it wouldn’t be able to conduct adequate oversight. An ETF would have allowed bitcoin to be traded publicly anywhere in the world. Notwithstanding, I think its approval is inevitable in the near future, though similar regulations that are already in place inside existing financial systems will have to be effected in order to discourage illegal activities. Another major setback is the incomplete features/services in cryptocurrency software.

For example, most cryptocurrencies don’t offer insurance yet, despite being vulnerable to similar kinds of classic scams that have plagued paper markets for centuries. The most common one is the pump-and-dump fraud, whereby grifters profit unfairly by artificially blasting a cryptocurrency to the moon (inflate the price) and crashing it back to earth through false statements – buying at the lowest price and selling at the highest. Such schemes make every sudden rise and fall suspect. You may have heard about the Mt. Gox bitcoin scandal – the world’s largest bitcoin intermediary and leading bitcoin exchange that vanished mysteriously, like NYS funds, with bitcoins worth more than $450 million at the time. Some of the missing bitcoins have since been “found” but their disappearance was blamed on theft, fraud and mismanagement at the company, which goes to show that the system is 100% foolproof to hacks.

On a side note, cryptocurrency enthusiasts/savvy geeks are always at the risk of getting Obsessive Cryptocurrency Disorder (OCD).

Huh? That actually exists?

Yes. It’s as real as ADHD.

So what happened to the unrecovered bitcoins in the Mt. Gox opprobrium? Are they still in circulation?

No. Lost bitcoins remain dormant forever because there’s no way for anybody to find the private key(s) that would allow them to be spent again.

From the discussions or forums about cryptocurrency, on my social media feed and close circles, I can conclude that majority of Kenyans still think that it’s one big Ponzi. As an enthusiast with a bit of experience, what do you have to say about this?

I get that kind of talk every day. Unfortunately, most of it emanates from Nocoiners (people with no bitcoin). And it is quite common for important breakthroughs to get bad press or be perceived as controversial before they’re well understood and accepted. The Internet is best example. Ponzi schemes are scams designed to collapse at the expense of the last investors when there aren’t enough new participants. Cryptocurrencies are open-source software projects with no central authority, therefore no one is in a position to make fraudulent representations about investment returns.

Nonetheless, you can’t be blind to the fact that social media is currently influxed with quacks, camouflaged as “Cryptoneurs” and “Bitmillionaires.” These are the same people misleading the ignorant public on the subject. Funny enough, even after witnessing or being duped in past Ponzi schemes, Kenyans still fall for the same “magic tricks.” I mean, you should never expect to get rich by riding a new wave without having your facts rights. Remember quail eggs?

I remember the season like it happened yesterday. I lost most of my savings in that scam.

Sorry to hear that. Anyway, information is your one true shield and defender. Thank God, nowadays, you can research on just about anything via the Web. It is always important to be wary of anything that sounds too good to be true or disobeys basic economic rules. Investing time and resources on anything related to cryptocurrency requires entrepreneurship; proper evaluation of the costs and risks involved. Undoubtedly, my educational background in computer science and engineering has contributed to my quick understanding of cryptocurrency, but I’d still be at a disadvantage if I didn’t do my research or consult mavericks in the field.

Which cryptocurrencies do you currently have in your wallet(s)?

Etherium, Litecoin and Mandala.

How can I acquire them and keep track of the daily price and market changes?

You can either purchase them at a cryptocurrency exchange or receive them as payment for good or services if you’re already a user. You can also earn them through competitive mining. As for tracking, there are several reliable computer programs and phone apps that give live updates on cryptocurrency prices, market cap, exchange markets, upcoming and finished ICOs, and so much more.

Personally, I use CoinMarketApp (available on Google Playstore), which I find to bequick and easy to use.

And how can I make payments?

Payments are made from a wallet application, either on your computer or smartphone, by entering the recipient’s address, payment amount, then pressing send. To make it easier to enter a recipient’s address, many wallets obtain it by scanning a QR code or touching two phones together with NFC technology.

Will I be charged a transaction fee for every payment?

On normal occasions, yes. Transaction fees vary from one cryptocurrency to another. Most cryptocurrencies give their users the option to review fees and choose what they think is appropriate, in regards to processing time, before making a payment. Generally, transaction fees are very low, and are used as protection against network overload or to pay miners for their work in helping secure the network.

I’ve always wondered whether someone can still receive cryptocurrencies when his/her device (computer/phone) is off. Is it possible?

Yes. Absolutely. They’ll appear on your wallet application when you launch it. Actually, cryptocurrencies are not received by the software on your device, as many would think. They are annexed to a blockchain that is shared between all the devices on the network.

Cool. I haven’t heard the bell yet. Proves how exciting this class been. Of course I’d like to continue asking questions but I’ll leave some space on my plate for “Do It Yourself” (DIY) lessons. With all the information you’ve shared today, I can confidently add “Cryptocurrency Guru” to my social media bios.

Hahaha. I should charge you for consultation. I’d also prefer to be paid in digital currency.

Anyway, it’s always a pleasure to share knowledge.

Thank you for the introduction. Let’s see how this new “Age of Crypto” unfolds.

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