Well-known, local TV station, SABC3 invited the Blockchain Academy to participate in a live discussion on Monday 6 November 2017 at its studio in Johannesburg on de-mystifying bitcoin and blockchain technology. Carel de Jager, an instructor at the academy, Xhanti Payi an economist, and Mpho Dagada, entrepreneur and cryptocurrency millionaire, talked about why bitcoin could be viewed as an investment, why it is so popular, what blockchain technology is and what you need to know before investing in bitcoin.
Xhanti felt that bitcoin has no underlying value and is not a currency but rather an investment only. This is an argument often brought up when discussing bitcoin. If we ask this about bitcoin, we should ask the same of fiat currency. In South Africa, the rand used to be backed by gold reserves, however the issuance of bank notes was completely cut from gold in 1971. If a country prints money and creates inflation, then there will be a decline in the value of the currency, which is the case in Zimbabwe. Bitcoin is entirely different to traditional currencies, as it is not backed by a nation’s economy, nor is it centrally controlled. This lack of tangible value means many people find the intrinsic worth of bitcoin difficult to understand. Furthermore, bitcoin is deflationary because only about 21 million bitcoin can ever exist in circulation. This is an important and significant difference between bitcoin and fiat currencies. This means the value of bitcoin, similarly to gold, because of its limited supply, can become more and more valuable and of course, demand will then increase for it. Bitcoins underlying value comes from the supply and demand for it: it is worth how much someone is willing to pay for it.
What is clear though, is that so much more education is needed on cryptocurrencies and blockchain technology.
View the discussion here.