Many Cryptocurrency companies are mushrooming in Uganda. Most of them, are strongly advertising, how one can get rich very fast and explaining how Uganda will soon become a cashless economy with no need for cash or paper transactions.
A cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently in a central bank.
Just at the start of this week, renown and decentralized cryptocurrency Bitcoin plunged to its lowest from nearly $20,000 late last year to $5000. It is estimated that this notoriously volatile cryptocurrency is down by about 75 per cent.
This huge fall in the value of Bitcoin to below $5,000 (£3,889), is raising fresh questions about the cryptocurrency’s future.
Bitcoin was last valued at $5,000 more than a year ago, in October of 2017.
In Uganda, there are a number of Cryptocurrency companies advertising themselves. They range from Dagcoin, OneCoin, Boldcashers etc.
Bank of Uganda Governor Emmanuel Tumusiime Mutebile is still not yet convinced and skeptical that Cryptocurrency is a good thing for Uganda.
Why Bitcoin and other Cryptocurrencies have failed globally
Based on block chain technology, as you hear block, there are blocks each transactions and its authenticity thus slowing the speed and increasing the cost of each and every transaction.
Block chain is too slow and very expensive. Bitcoin allows for only 7/sec, the best on block chain doing only 3,000 transactions per second globally. Instead of being a day to day payment, it becomes a day to day trading platform.
CoinDesk’s bitcoin price tracker has shown the cryptocurrency falling to below $5,000 this week, a decline of about 10 per cent during a 24-hour period.
The currency fell further, dropping briefly to about $4,200 on Tuesday morning before recovering later in the day, according to Coindesk.
The decline also marks a roughly 75 per cent drop since late last year, when it was briefly valued at nearly $20,000, followed by a sell-off after Christmas.
The latest decline values all Bitcoin in existence at under $87bn.
Other cryptocurrencies in the United States, including Ripple, Ethereum, Bitcoin Cash, Stellar and Litecoin also declined last week and at the beginning of this week.
Bitcoin Cash — itself a fork of Bitcoin that was created in mid-2017 — forked again into two competing currencies, Bitcoin Cash ABC and Bitcoin Cash SV.
This fork, like that of last year, resulted from the inability of currency miners and developers to agree on the direction in which they wished to take the currency.
The latest fork has caused concern in cryptocurrency circles and led to a sharp one-day decline in Bitcoin’s value.
The currency then stabilised at around $5,500 until dropping again, as industry analysts issued a raft of warnings about it and about the future of cryptocurrencies in general.
What industry experts and financial analysts say about Cryptocurrency
US-based cryptocurrency exchange Kraken said that it considers Bitcoin Cash SV and many other cryptocurrencies an “extremely high-risk investment”.
Accounting giant KPMG notes that it considered using cryptocurrencies as a way to store a value to be a “fool’s errand”, while analysts polled by Bloomberg said Bitcoin’s price could fall a further 70 per cent to only $1,500.
Underlying the long-held scepticism of cryptocurrencies by governments and many financial analysts is a question of economic theory.
Many analysts believe, Cryptocurrencies are something that can be replicated indefinitely “must lack long-term value”.
Bitcoin sought at the beginning to get around this question by designing in a strict limit of 21 million Bitcoins, a limit it was estimated would be reached around the year 2140.
But the multiplication of other Cryptocurrencies, and now Bitcoin’s recent forks, have evidently brought such questions back to investors’ minds, industry observers said.
BY PAUL TENTENA