February 18, 2018

The Senate on Cryptocurrency

By Tuedor Jackson

I am a lawyer cum cryptopreneur well versed in the blockchain technology and cryptocurrency as a current financial tool in the world today, having undergone trainings on the blockchain technology in the UK and USA respectively.

I was disturbed on hearing a report on January 31 wherein the Senate urged    the CBN, NDIC to warn Nigerians against cryptocurrency and investments in Bitcoin.

The technology behind Bitcoin and other digital currencies has the potential to change everything about how we humans do business and has indeed become so widespread and beneficial that developed countries all over the world are looking seriously into taking advantage of the blockchain technology to create wealth, curb fraud and corruption and make business and financial transactions more safe, secure, transparent and beneficial to all and sundry.

The most important thing is first to be educated on cryptocurrency.    Being an unregulated sector makes it prone to scams and illegal activities, but with the help of education one can easily decipher the real from the fake. Like the dotcom crisis where everyone was rushing to invest in internet startups in the early 90s which later turned out that 90% of such startups could not make it so a lot of people lost money.

But the real ones turned out to be the best investments of the century where companies like Google, Yahoo, Apple, Facebook and Amazon made billionairee out of the early investors.

So also will happen to cryptocurrency. With regulation, many of the scams will  be weeded outt. The authorities only needf create a group of cryptocurrency experts to create blockchain services that will go a long way to better the lot of the common man and the polity in general. There is so much to do but I believe that we will get there.

In a layman’s definition, the blockchain technology is an open ledger that stores all activities/transactions spread across different computers worldwide that cannot be manipulated, altered or destroyed.

The blockchain is an ingenious invention – the brainchild of a person known by the pseudonym, Satoshi Nakamoto, and, since then, it has evolved into something five times bigger than the internet technology as more user options have been discovered from this new technology and will create even more billionaires than the internet technology did.

Blockchain is best known for being the technology behind cryptocurrencies like Bitcoin and Ether (the currency of Ethereum), but blockchain is much more than an instrument of finance. It’s an encrypted database of agreements, so to speak.

This means once a “deal” is made, neither party can go back and rewrite the terms. Smart Contracts––a blockchain based contract that holds both parties accountable by only completing the terms of the agreement once both parties have fulfilled their end of the bargain––is a perfect example.

Blockchain serves as a bookkeeping platform or ledger that is incorruptible, enforces transparency, and bypasses censorship. By tackling issues of financial, political and institutional corruption, this has the potential to create massive social change—and greatly protect the human rights of every individual.

By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet. Originally devised for the digital currency, Bitcoin, the tech community is now finding other potential uses for the technology so much now that the blockchain technology is now used in different spheres of human endeavor which I will briefly state herein.

Tacking refugee crisis

This year, the UNWFP sent over 10,000 Syrian refugees cryptocurrency-based vouchers. Led by Ethereum co-founder Gavin Wood, and blockchain big data firm Datarella, Parity Technologies put this platform into action and helped thousands of refugees use cryptocurrency to purchase food,  according to Coindesk.

In 2014, the Syrian crisis had “become the biggest humanitarian emergency of our era,” said  António Guterres, the UN High Commissioner for Refugees. Today, the global refugee crisis continues to grow, and the agencies and countries whom are heavily invested are having to look toward new solutions to solve an otherwise unmanageable situation.

The opportunity to bypass bureaucracy and international uncertainty with Ethereum technology not only gives refugees direct access to donations, but stands as a huge first step in including them in dialogue aimed at solving the international refugee crisis.

Creating financial avenues for impoverished people

The same blockchain platform used to provide financial vouchers to refugees is also working to bridge a poverty gap around the world. As we’ve already seen, blockchain can act as a bank-like institution for people without bank accounts.

As long as you have access to a smartphone, you’ll have a way to conveniently access money.

Additionally, blockchain is a decentralized system, which means you don’t get charged to transfer money the way you would with typical financial institutions.

This disrupts the international socio-economic landscape because remittance is costly, and as such can deter businesses from reaching certain regions of the world, severing opportunities for developing nations. It also creates a financial strain for people sending money to their family members overseas.

Last year, the total amount it cost to send money to Sub-saharan Africa was over $30 billion, and according to the Bureau of Economic Analysis, the yearly remittance from international financial transfers out of the US is up to $50 billion.

BitPesa, a platform that sends and collects crypto-payments between Africa and the rest of the world, is an excellent example of the positive effects and economic freedom blockchain technology can offer.

This is exceptionally promising, considering  Africa is currently the most costly continent to send money to.

This technology tackles two huge variables of global poverty. First, it makes sending money cheaper for migrants, immigrants, and refugees who need to send money back to their families, and second, it makes doing business with hard-to-reach countries more convenient. This alone has the potential to lessen extreme poverty.

Preventing voter fraud

Cyber security and voter fraud have been exceptionally concern since the United State’s 2016 election. Unfortunately, this isn’t the first time voter legitimacy has been question. Voter fraud is a critical imposition on the productive and accountable formation of democracy across the globe. Blockchain technology has the ability to provide an unhackable electronic vote-counting system.

This system can secure an election during voter registration, and can account for the voters identification and insure votes cannot be tampered with at a later date. In the same way blockchain acts as a public ledger for cryptocurrencies, it can also create a permanent and public ledger for votes as tallied—promising a future of equitable democratic elections around the world. There’s a startup already working on this called  Follow My Vote.

Improving government efficiency

Blockchain has the ability to accelerate governmental capabilities, and affect functions like public benefits, healthcare and education.

For example, government processes can be slow, difficult to understand, and highly susceptible to corruption. Blockchain, as a solution, can aid governments in being more efficient and secure—in every sense.

The archaic technology in hospitals around the world create unnecessary issues for medical patients and their records. MedRec is a perfect example of what blockchain is looking to improve within healthcare. According to MIT Media Lab, MedRec is, “a novel, decentralized record management system for EMRs that uses blockchain technology to manage authentication, confidentiality, accountability, and data sharing.”

Blockchain, as both a technology and an industry, is still largely undefined. We are in an exploration stage, far from any established or proven solutions. However, it’s a promising (and relevant) solution aiming to solve for some of human right’s most vulnerable areas: corruption, financial inequality, and access to information.

By setting an international precedent-––and hopefully a standard––for transparency, blockchain tech is closing the economic gap and solving for the preservation of human rights.

I desire to enlighten this distinguished Senate    on the veracity of digital currencies and Bitcoin (as a store of value) and how our dear country can take advantage of these times. An assertion that Bitcoin or digital currency is another MMM or ponzi scheme clearly shows an inaccurate knowledge on virtual currencies and the impact it will have on the lives of humans worldwide hence, I will be most glad if given an opportunity to explain it in its entity and the advantage awaiting those countries that takes this technology seriously.

As we speak, countries like Russia, USA, UK, Germany, UAE have started testing the blockchain technology in governance, cryptocurrencies and finances. Cryptocurrencies are following the same exponential growth trajectory as the Internet (remember how so many people criticized the internet until its use cases were discovered and how it took our lives to the next level? so will the blockchain technology), it is a once-in-a-generation investment opportunity.

There is so much human capital and real money being pouredinto this space. We are just at the take off point and Nigeria should take advantage. I am very open at any point in time to come before the distinguished senate to further buttress and enlighten more on this subject.

* Jackson is MD/CEO    Deotaj Global Services Nig. Ltd and Founding Partner, Pegasus Legal Practitioners.

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