Perhaps The BitCoin Boat Has Sailed, But Blockchain Technology Is Something To Keep Your Eye On

Unless you’ve been living under a mossy rock for the past 18 months, at some point you must have come across someone in your office or circle of friends chatting up a storm about “Bitcoin”. If you really have no cooking clue what we are referring to, Bitcoin is a digital currency which was created in 2009 by a mysterious figure using the alias Satoshi Nakamoto. It can be used to buy or sell items from people and companies that accept Bitcoin as payment. At the time of writing this blog post, one Bitcoin was trading at R96 141.

The reason why Bitcoin has become a buzz word on everyone’s lips, around the globe, is because of its meteoric rise in value.

Back in July 2010, a Bitcoin was worth $0.08. At the end of 2017 (only 7 years later) a Bitcoin was trading at $19,783. Granted the crypto currency has fallen back significantly since its heights at the end of 2017 (now trading at $6,709) but if you bought Bitcoin in the early days, you would have made a fortune.

Is It Still Worth Investing In Bitcoin?

Who really knows. A lot of the momentum that built up in the last 18 months was down to pure speculation. Suddenly everyone in the world wanted a Bitcoin (there are only going to be 21 million Bitcoins available) and as a result the price just kept climbing and climbing and climbing.

But as the saying goes “What goes up, must come down” and in 2018 the Bitcoin price has dropped back to around $6,000.

Is that a fair value?

It depends on what your long-term view is.

  • There is a limited supply of Bitcoins (that will continue to drive the price up)
  • The world has woken up to the idea of Crypto currency (We have Bitcoin to thank for that)
  • Major businesses around the world will accept Bitcoin as payment

But is it worth R96,141?

The truth is that it’s unlikely Bitcoin will ever see a dramatic price rise like it did in the last 24 months. It was unprecedented. If you have R96, 141 lying around and you don’t have an issue if the value of your investment halves overnight then take a shot at Bitcoin.

Most of us don’t have that type of money lying around so we can’t get an entire Bitcoin. If you wanted to you could buy a piece of a Bitcoin.

Forget about the Bitcoin hype for a second, if you understand the technology behind it, you will get a sense that that’s the future and something worth investing in.

Blockchain – that is less of a buzzword than Bitcoin, but really is the unsung hero and the horse to back

This is how it works (In simple laymen’s terms)

Blockchain technology props up all the crypto currencies (yes Bitcoin isnt the only digital currency). Remember that you can’t see, smell, or touch digital currency. You can’t draw it out of an ATM or stash it under your bed. It’s a virtual currency that isn’t controlled by a banking system or any Government.

Imagine for a second you owned a Bitcoin. You are doing your monthly grocery shopping at Pick n Pay and at the check out counter you ask if they accept Bitcoin. The check out assistant says they do and she gives you their e-wallet (just like a normal wallet, but online) for you to transfer some of your Bitcoin over to.

You open your phone, get into your e-wallet App and crack off a small portion of your Bitcoin to transfer to Pick n Pay for your groceries.

Now, in a conventional banking system this is what would happen:

  • You would take out your banking card (cheque, savings or credit card)
  • You would swipe and enter a unique PIN
  • Money would be transferred from your banking account to Pick n Pay’s account (in a manner of speaking)

But as we mentioned a little earlier, crypto currencies don’t use banking systems. Instead, Blockchain technology is a “digital ledger”.

Every time a Bitcoin (or piece of Bitcoin) is bought or sold, Blockchain creates a record of it.

Think of it as a virtual accountant who is sitting behind the scenes processing millions of transactions every couple of minutes (and no banks are involved). The real benefit of Blockchain technology is that it is housed on a network of computers, so the transaction or record cannot be tampered with or altered.

Blockchain technology is bullet proof and has opened an entire world of possibilities.

Imagine a world with no banks and no banking fees. A cashless environment where we all walk around with virtual currency that we can transfer to each other for services rendered.

The pool guys pops in to sort out your pool and as he walks out you just pay him immediately with a virtual currency.

It looks like that’s where it’s heading and blockchain technology will be propping up the system. Bitcoin might have introduced us to the idea of “digital currency”, but blockchain will certainly pave the way for how we transact in the future.

Until next time.

The Wise About Life team



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