By the time you start to read this, you are already interested in learning more about Cryptocurrency, which is good. I advise you to take it slow because I am about to shed insights that might conflict with your interest. But trust me, it will be worth it.
Cryptocurrency: What it entails.
It has been over ten years since a group of programmers founded a new kind of currency. Not a national one, nor regional. A global currency. One that is intangible; is a digital currency or any form of currency that exists digitally or virtually and uses cryptography to secure transactions. To my little knowledge and vague memory, I discovered cryptocurrency right after high school in early 2017. Well, to be honest, Africa at that time was discovering a digital currency that was completely different from mobile money. And if I am not mistaken, the younger population were becoming new investors and traders.
A former high school classmate of mine was fully invested in the discovery, he explained to me the basics and how he invested in his first ‘Bitcoin’. I remember a local news headline in November 2017 of a man paying dowry in Bitcoins.
As if that was not weird enough, the bride’s family were curious as they learned one or two from him and accepted the Bitcoins. He decided to break the norm of traditions in Kenya and Africa. You see, Dowry (or Mahari in Swahili) is in form of sheep, goats or cows. Many communities have their own dowry agreements, even until now in the modern age when it comes to bride price when one is to marry or to be married. So, Bitcoin as dowry was a first.
The Types of Cryptocurrencies.
I did not clarify what Bitcoin (BTC) is. This is a type of Cryptocurrency, first to be commercialized globally as open-source software. It has no central bank or administrator. Users can send to each other on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a publicly distributed ledger called a blockchain. Currently, as I write this article. 1 Bitcoin equates to KES4,504,071.51. There are other types of cryptocurrencies today:
- Ethereum (ETH) — $826 billion
- Litecoin (LTC) — $390 billion
- Binance Coin (BNB) — $79.5 billion
- Cardano (ADA) — $66.3 billion
- Dogecoin (DOGE) — $63.4 billion
- Tether (USDT) — $58.2 billion
- Polkadot (DOT) — $20.8 billion
This is the list of popular cryptocurrencies as of March 2022.
The trends so far.
As I observed the history of cryptocurrency, I noticed how the chart behaves like any stock market in the world. People around the world are choosing to invest in shares, bonds, real estate and stocks… the list is quite endless. This is developing financial growth for individuals who are wary about the future since the future is unpredictable. But what about investing in Cryptography? This is one area that comes with risks and guts.
To understand someone’s point of view and how the trend works, I approached Wallace, 24 years old, who is a young entrepreneur online gamer, graphic designer and young parent. He recently shared in our gamers group chat how he has been living currently to keep up with life as a crypto user.
“I run my own tours and travel company. It was always something I’ve wanted to do since I discovered my passion for travelling. Then I also decided to venture into crypto stuff for different cryptocurrencies. So, I got a loan from family and ventured into it and I can say…it was my greatest decision.” He recalls how he had to strategize getting the loan for it. “My mom actually loaned me but I had to pitch her the perfect reason. I didn’t want to work 9 to 5 and I needed money. Mind you, it was a huge loan.” Eventually, he was able to repay the loan in two months. But after those 2 months, he made some sacrifices along the way.
“I stopped school but I’ll revisit later maybe to pursue Masters at some point. I was a 3rd-year student. Probably I will consider e-learning at some point.” After repaying it in 2 months, he went fully into it…dedicated everything to it, no looking back. He got a good mentor to teach him the stuff he had to know. Afterwards, he started getting into stock trading. “I remember when I bought some Tesla, DWAC and Microsoft stocks…though Microsoft drains the investment.”
“I started investing in Bitcoin about 5 years. Then went into Litecoin, Then Ethereum….but I ended up selling the Litecoin to add on the Ethereum” This is how Wallace has been keeping up with the trends of cryptocurrency. Pretty hard work if you ask me, but for what is worth. Cryptocurrency and blockchain are one of the most beautiful digital transformations occurring around the world, only time will tell how good it is.
Now, the trends also influence social media, which plays a very crucial part in cryptocurrency. Elon Musk is the influence of it — his tweets on Bitcoin and Dogecoin have influenced the prices of BTC and Doge. His tweets are making a huge impact on not only his company but also the market whether it’s the stock or share market. There are ads, posts and tweets about different crypto-related stuff. Some are like banks of sorts and some offer Credit/Debit Cards that store digital currencies and data. A good example is Binance, they got the app, website and the world’s leading blockchain ecosystem and digital asset exchange. Their ads appear every time I open Twitter scrolling through my feed.
Impacts on the Global Economy.
As of January 2020, there are more than 2000 cryptocurrencies that exist globally. Adding on to that, nearly 36.5 million in the US own or invest in some type of currency. While cryptocurrency thrives in every corner of the globe, there have been major concerns about it in the world markets. In all honesty, I learned that the global economy shifted differently in 2008 due to The Great Recession, that is my recent discovery.
As our country has unique economic issues, there is a potential danger if Kenya implements its own digital currency (which was in consideration as of February 2022). Back in 2017, even 1 Bitcoin did not estimate to be close to a million shillings like now. And how foreign currencies like Dollar, Euro and Pound keep getting weak with our local currency changing the rates and fees even more affecting cryptocurrency.
What has been affecting many global tech industries currently is the shortage of CPUs and graphics cards (GPUs) since the pandemic started. It has been quite rough for phone manufacturers, gamers, and PC Builders. A graphics card like Nvidia’s RTX 3080 goes for $2,400 when it should be retailing for $699. This is because there was no steady production at that time and many manufacturers suffered disruptions. It is said that crypto-miners are to blame for the shortages as a result of Ethereum, for the raising of prices.
Right now, the markets are treading dangerous waters due to the wars between Russia and Ukraine. Not only is Cryptocurrency affected, but also fuel prices and raw materials of commodities.
If you were to ask any tech enthusiast or financial analyst, some would say that Crypto trading has recently dropped significantly. Well, that is not the case. They tend to spike every hour, but not a convenient time to invest as this is one of the risks a crypto trader takes note of.
Dangers of Crypto trading: Where are the risks?
Just like the internet, Cryptocurrency has potential red flags. Actually, quite a number of them. This new form of currency still has disadvantages that have prevented it from taking that next step. One of the major issues with online currency is the failure to protect buyers. Because the sites are against using a third party to delegate transactions, some buyers are left scammed.
Let me explain; social media is a hub for users who may have pure or ill intentions. As cybersecurity evolves over a period of time, hackers never rest while attempting to make their moves. I tweeted and posted an awareness of Online Privacy and why it is very important to keep your accounts safe. Something that most platforms remind their users all the time when one creates an account for the first time, like a tweet I posted before.
A few of my social media friends have been hacked by crypto trade scammers. Caren, a schoolmate I know, was one of the fallen victims. She clicked on a link that was sent to her Direct Messages. Next, she realizes she was locked out of her Instagram the following morning. She is the recent case that got me alarmed after a number of suspicious activities of similar accounts posting ‘Free Cash Giveaways’ on their Instagram stories. The funny thing is, a number of them are not that many crypto traders. Some of them have no interest in it. So, I asked myself, “How is this possible”?
“Don’t listen to those fake users, those are guys that try scamming people that they will trade on your behalf. If you are like busy then they steal your info,” Wallace advises “and your money may end up and lock you out of your accounts. They deceive people by telling them they’ll trade on their behalf.” I asked Wallace how they just hack into just accounts. He simply stated the two words; Saved Passwords.
“Like myself I was actually hacked last week, luckily the accounts I use for crypto trading I never save the password in my phone or Google accounts …….so they just got access into my Twitch accounts, Telegram and Twitter accounts.” He explains. “I keep finding that they follow random Twitch and Telegram accounts … so like on the daily I have to unfollow more than 15 accounts they randomly followed. Then finally I decided I’ll just delete my Twitch, Telegram and Twitter accounts completely and open new ones and not save password.”
The interesting discovery about these security breaches is that these hackers' accounts are from people in Asia, the Middle East and Nigeria, as Wallace shares his findings. As for Nigeria, these are accounts that focus on social media platforms. Asian accounts focus on personal data; hence data mining and illegal crypto mining takes place in those regions. Whereas, Middle East accounts focus on gamers' platforms.
Another danger any crypto trader needs to know is this: Cryptocurrencies haven’t proven themselves as a long-term investment — yet. Like investing right now is a high risk of either gaining more or losing it all. Nobody really knows what will happen to cryptocurrencies in the future — and you need to be brave to enter these uncharted waters as an investor.
Cryptocurrencies can be an extremely volatile investment (common red flag). While the price of a cryptocurrency can spike to dizzying highs (with associated benefits for investors!) it can also crash to terrifying lows just as quickly. So, if you’re looking to make stable returns, this might not be the best bet. The cryptocurrency market fundamentally thrives on speculation, and its relatively small size makes it more vulnerable to price fluctuations. That in turn can wreak havoc with the value of coins — one of the major disadvantages of cryptocurrency.
Is it worth breaking your bank?
Personally, I would not bother to invest in crypto trading now or in the near future. I am not that kind of a risk-taker when it comes to personal finances. Sure, money invested builds one’s wealth, but so does the global economy. Of course, it has some benefits;
1. High risk — and the potential for high rewards.
There are more than 10,000 cryptocurrencies on the market today and each one has its own particular quirks. But all cryptocurrencies have a few things in common — like their tendency to experience sudden spikes (and drops) in value. Prices are driven primarily by the supply of coins from miners and the demand for them by purchasers. And these supply-demand dynamics can result in hefty returns.
2. The blockchain technology underlying cryptocurrency is inherently secure.
Some of the major benefits of cryptocurrencies aren’t linked to the currencies themselves, but to the infrastructure that supports them. That’s the blockchain — the decentralized data-storage ledger that tracks every transaction undertaken on it. Once you make an entry in the blockchain, it can never be erased. And with the blockchain stored decentrally across multiple computers, no hacker can access the entire chain in one go; any information stored in it is safe for good.
3. Crypto trades around the clock.
Another advantage that cryptocurrencies have over banks is that the crypto markets are always open. With coins being mined and transactions being recorded around the clock, you don’t have to wait for the NYSE, NASDAQ or any other exchange to start trading for the day if you want to buy, sell, or trade crypto. This has made such an impact that regular stock exchanges are looking into the option of trading stocks outside of regular banking hours as well — although that might still be some way off. So, for investors who are on the go 24/7, crypto might be the best way to generate returns outside of normal working hours.
4. Cryptocurrencies could help investors beat inflation
Cryptocurrencies aren’t tied to a single currency or economy, so their price reflects global demand rather than, say, national inflation. But what about the inflation of cryptocurrencies themselves? As an investor, you can rest easy, for the most part. The number of coins is capped, so the amount available can’t spiral out of control, thus, no inflation. Some coins (like Bitcoin) have an overall cap, and others (like Ethereum) have an annual cap, but either way, this approach keeps inflation at bay.
In January 2022, the Central Bank of Kenya were calling upon all Kenyan citizens to develop a new digital currency, which was actually a very good idea. But then I write this article asking myself, “Don’t we have so much economical struggles currently in this country already?” Cryptocurrencies can be a minefield for new investors. From unfamiliar terminology to complex technology, it’s a topic that takes some getting used to. Social media sums up a digital environment. (But I am not ready to talk about NFTs, and never will.)
After posting about Online Privacy and tips, I have gotten responses from people with similar experiences, before I came up with this article piece. I am glad to help share awareness on how to be vigilant on the internet.
