Cryptocurrencies have received quite abit of media this year from jaw dropping heists at a various exchanges to the bipolar behavior of markets that saw the value of publicly traded cryptocurrencies hit $ 180 billion 35 weeks into 2017, even as one of the better known currencies – Bitcoin touched $ 5,000; many a fortune made and lost. As of July 2017, there were over 900 digital currencies in existence.
Locally our dalliance with cryptocurrencies has been marred by Central Bank issued public memos and court cases pitting mobile money operators, payment gateways and local value exchanges, off the back of the anonymity feature that had been pushed quite heavily and which the dark web took to in the early days to power illicit transactions; in my opinion, a red herring used to great effect to build a moat around local mobile money concerns.
Many have been asking how to get on this train, largely driven by the fear of missing out, and online lie many pundits and platforms that claim to be the best path to riches. The use of the term riches or wealth is abit disconcerting as it tends to make people abandon reasoning and numb themselves towards risks involved. There are three primary ways to make money with cryptocurrencies each with its pro’s and cons.
This is how the currencies come to life, as a gift towards efforts done on certain sets of mathematical tasks whose difficulty varies. You can either invest in a mining rig – a built for purpose computer or join a club that pools resources and shares out accruing revenues. There are industrial scale mining operations in regions that have access to cheap connectivity and reliable electricity which are key to a successful operation – China and Eastern Europe dominate. Even at hobbyist level you would still need a substantial investment for your rig, up and above deciding which currency to mine; Bitcoin for instance would not be worth it at this time for a small time operation. The mining clubs have their fair share of issues and are wrought with scams and fraud.
A simple process really, where you would try to beat the market having purchased a certain amount of crypto and monitor movement to try sell high. This calls for a higher propensity to risk as the markets are still very erratic.
This builds on the underlying blockchain technology. The most powerful feature being the immutability of transactions that essentially commoditizes trust. Applications for this new found value are limited only by your imagination. Companies looking to raise funds without using traditional instruments are exploring initial coin offerings (ICO) digital stock certificates akin to traditional shares. However, in the US the Securities and Exchange Commission is looking at regulating this while China banned them outright earlier this week. Two ICO’s crossed into unicorn territory too hitting the coveted $ 1 Billion mark.
My bets are on value addition, building scalable systems of record that will power the next generation services across multiple industries and use cases.