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Monday, January 08, 2018

BitCoin: Avoidable unsustainable bubble - Ajijola

The BitCoin fever currently raving in the global cyber space has been described as an unsustainable bubble to be avoided, reports ITRealms.

A Commissioner at the Global Commission on the Stability of Cyberspace (GCSC), Alhaji Abdul-Hakeem Ajijola made this assertion while recently discussing “New Money, Cryptocurrencies and Block-Chain Technology,” noting the importance of being wary of “anything that sounds too good to be true, or that seems to disobey basic economic rules.”

According to him, money is a "trusted intermediary of value" be it commodities, cowries, gold, paper, plastic or digital (virtual), defining cryptocurrency or crypto currency, as a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets.

Ajijola who is also the chairman of Consultancy Support Services Limited, noted that stakeholders should lower their expectations and mostly not expect to get rich with BitCoin, or any emerging technology by itself, without an underlying value proposition.

“They present opportunities that are high risk, albeit with high rewards, but remember that the probabilities are that more will fail than succeed,” he said.

Ajijola stressed that users of BitCoin have no recourse if they lose their cryptocurrency wallet and especially the private crypto keys, which would likely reside on their computer or phone. If you lose your phone, or computer hard disk crashes, the crypto-money is there but you have no access to it. Money that cannot be accessed, or to otherwise used, has no value.

He posited that the BitCoin bubble, as manifest by the incredible rate of increase in assigned value without any "apparent" underlying economic logic, seems to be driven by "emotion" provides significant cause for concern.

Therefore, he believes that the bottom line is that cryptocurrencies are here to stay, and we must exploit the opportunities that Block-Chain technology presents.

“However, BitCoin is the biggest bubble so far, and my sense is that it is unsustainable, and therefore BitCoin should be avoided, for now,” he said.

Ajijola emphasized that there are also valid concerns about the use of cryptocurrencies, and BitCoin in particular, to facilitate criminals, and illegal activity.

“This is a cause for concern across the spectrum of all currencies and moral codes. Conversations will likely continue, on the acceptability of BitCoin as money in our indigenous context. However, we may be able to quickly achieve a consensus norm that BitCoin, or other similar Block-Chain based infrastructures are acceptable as payment networks.

“More importantly, we should avoid unbridled speculation types of investment in BitCoin, or other cryptocurrencies, because we believe that others will enter and push the price higher. Such speculation is, arguably, a classic case of a pyramid scheme, which goes against our indigenous values, religious principles and moral codes. However, I am inclined to accept it as a transactional medium, when the need arises and remain cautious on the speculative aspects,” he said.

The cyber security expert, further advocated focus on the ‘trusted intermediary’ nature of BitCoin and other cryptocurrency networks, and avoid the questionable ‘pyramid investment opportunities.’

“We must seek to legitimately exploit the underlying Block-Chain technology, and this is the direction the world is going. The world is adopting Block-Chain technology across a broad swathe of activities and sectors. Thus, let us not lose sight of the larger opportunities by unduly focussing on the short-term prospects of BitCoin,” he said.

Chuks Egbune/GEE

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