Cryptocurrency next evolution of money for coming generation from blockchain technology

Cryptocurrency next evolution of money for coming generation from blockchain technology



    Money can be defined as anything that is generally acceptable as a medium of exchange for making payments, settlement of debts or other business obligations. Before money came on board trade by barter was the other of the day. Trade by barter may be defined as the direct system and practice of exchanging goods for goods and services for services. There are some challenges or problems encountered by trade by barter that is why people thought of what to do and money was introduced. Money and bank have common ancestor – goldsmith. The paper money presently in use originated from goldsmith receipts, the goldsmith issued to people who kept gold and other valuables with them. Due to the emergency of technology, cryptocurrency evolved and a product of 21st century digital money.

    Cryptocurrency is a digital asset or electronic money which has been tokenized to represent physical money used for means of payment and business transaction. Cryptocurrency is managed through decentralization rather than the centralization of the former banking system. It is operated by digital ledger called blockchain. Blockchain refers to a mechanism of recording information in way that makes it hard to change, cheat, hack or manipulate the data. The decentralized database is managed by multiple participants which is called DLT (Distributed Ledger Technology). 

    There are different types of crypto currency that have been designed. The first being Bitcoin (BTC). It was first released as open source software in 2009. 

    Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. The Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a hash.

    Problems of Cryptocurrency ; Bitcoin 

    There are two certainties in tech: innovation and regulation. All disruptive new technologies encounter regulation on the path to mass adoption. Think Uber with the taxi industry or Airbnb with the hotel industry. 

    Both navigate complex patchworks of rules across the many regions in which they now operate. But these haven’t stopped them becoming the behemoths they are today. In fact, you could argue regulation has actually helped them get to where they are.

    The same is true of Bitcoin and other cryptocurrencies. The cryptocurrency industry has, historically, faced limited regulation. However, this is changing rapidly and there has been a clear global move to regulate providers in recent times. We are now required to comply with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) legislation in several of the countries we operate in. 

    Where that's not yet the case, we have clear guidance from the Financial Action Task Force (FATF) to measure our approach against. In terms of data protection too, different regions all have some form of law – including the General Data Protection Regulation (GDPR) in the EU and the Protection of Personal Information Act (POPI) Act in South Africa. 

    This approach isn’t necessarily common in the crypto industry. Many crypto exchanges have decided to wait until they are bound by regulatory requirements before doing anything. This is fine – freedom can be seductive and there’s profit to be made. 


    Regulation in the crypto industry is important for many reasons, but chief among them is customer protection. Regulations help to protect your cryptocurrencies by lifting standards in the industry and implementing barriers to entry for operators with low concern (or capabilities) for consumer protection. An effective regulatory regime typically imposes obligations that promote the protection of customer funds and the crypto ecosystem more broadly. 

    As such, the existence of a license to operate or other regulatory standing should provide customers with a good indication that a company can be trusted with their funds, and that they will have controls in place to prevent use of cryptocurrency for illicit means.

    Such trust is vital for any company that deals with your finances, but particularly in crypto as it’s still not widely understood. There remains a widespread misapprehension that Bitcoin is only used for ‘bad’ or criminal purposes, and this unfairly tarnishes the entire industry.

    For cryptocurrency platforms, regulation is also important because it lays the groundwork to develop the relationships critical to success. Key among these relationships are those with banking institutions. Banking services have, to date, been difficult to obtain for those providing cryptocurrency platforms, with banks often citing a lack of regulatory certainty as giving rise to unacceptable risk. Should this risk be diminished, all parties again would benefit in myriad ways and the experience for customers would be vastly improved.

    What does effective regulation look like?

    While regulation is necessary, it’s also important that it’s designed and implemented effectively. Regulators don’t have an easy task. They have to get to grips with a new technology that very few yet understand. They’re also working with limited evidence of cryptocurrency’s impact on society and any unintended consequences that may arise from widespread use – or, indeed, from their regulations. And they must do all of this without stifling innovation, carefully weighing the need to protect consumers with the benefits of a new technology with huge potential.

    Importantly, it’s essential that the global nature of cryptocurrency is taken into account in the design of any regulatory framework. Crypto knows no borders. This presents new risks that are not commonly encountered with other financial instruments. Outright prohibition or ineffective regulation risks unintended consequences. In particular, regulatory arbitrage results, an "underground market" develops or the peer-to-peer market booms, thereby causing a lack of visibility for regulators and a lack of protection for consumers.

    Ultimately, we hope that a global regulatory framework can be implemented, or at least some form of ‘passporting’ or mutual recognition regime developed, such that crypto asset service providers can expect consistent treatment, and live up to consistent standards, across all jurisdictions. The guidance provided by FATF in terms of anti-money laundering And countering the financing of terrorism is a useful step in the right direction, but the industry has a long way to go before it can say it is truly global. For now, we’re working hard to ensure effective regulation in the countries we operate in.

    Effective regulation requires a collaborative and phased approach, with regulators acknowledging the benefits of gathering learning and working alongside industry. An excellent example can be seen in South Africa, where the Intergovernmental Fintech Working Group (IFWG) has released a position paper on crypto assets (the Position Paper). The Position Paper provides recommendations for the development of a regulatory framework for crypto-assets and suggestions on how the changes should be implemented at the foothills of a long trend of institutional adoption and financialisation of bitcoin. Think of bitcoin's bad reputation as a risk premium as we move through the process of normalisation, regulation, and institutionalisation, the compression of this premium can have a dramatic effect on the price.