The head of the Bitcoin Foundation has issued a word of caution, telling people not to invest “more than they can afford” in the virtual currency.
The Bitcoin Foundation is a non-profit organisation, based in Washington, that promotes Bitcoin globally.
Llew Claasen, head of the foundation, was speaking about the potential use of Bitcoin in Africa, where many lack access to formal banking. He said that Bitcoin had already been adopted in a number of African nations, including Kenya, Nigeria and South Africa.
Claasen said this was due to the crypto-currencies enhanced effectiveness in nations with volatile economies, saying: “It offers people a chance to protect their savings from government abuse of monetary policy.
“A lot of people in Zimbabwe are interested in it as an alternative financial system, but that is not an easy thing to do formally as we don’t want to be perceived as wanting to disrupt economies.”
“It means a small business owner can tokenise shares in his business so investors do not have to go through a central intermediary or register their shares.”
Mr Claasen said that, presently, Bitcoin is not a perfect alternative to cash, but an upcoming upgrade would make mobile transactions easier.
“Currently the network has a transactional input of three to four transactions per second, which isn’t great if you want to use it as cash.
“But once the upgrade goes live, effectively there will be no limit to the transactions the network can handle.”
However, Claasen believes that everyone would soon have two wallets, one with local currency and one with crypto-currencies.
He dismissed concerns over the use of the currency for criminal purposes, citing an EU report that suggested its use for criminal activity was nowhere near as high as first thought.
“It found that there was not a lot of large-scale criminal behaviour,” he said.
“Bitcoin is not completely anonymous and it is fairly easy for someone, say a revenue officer, to work backwards to find who was responsible for a transaction.”