There are a ton of Bitcoin success stories out there. Recently, Core Media reported on the story of a Swedish computer engineer, Alexander Bottema, who put it all on Bitcoin and saw his decision make him 100 times richer. Now, the head of the Bitcoin Foundation, Llew Claasen, urged people not to do what Alexander Bottema did, stating that people should invest “no more than they can afford” in Bitcoin.
Claasen’s advice was given when he was speaking the TEDGlobal conference in Tanzania about the cryptocurrency’s potential in Africa, where millions of people lack access to modern financial services. Mobile money is rising in the continent and that means a lot of people are now willing to embrace alternatives to traditional banking.
According to Claasen, Bitcoin has been embraced in countries like Kenya, South Africa, and Nigeria, as it has particular resonance in countries with volatile economies. He clarified to the BBC that he doesn’t want Bitcoin to be seen as a tool to disrupt economies, but that a lot of people are interested in it as an alternative to the financial system, using Zimbabwe as an example. He added that:
“It offers people a chance to protect their savings from government abuse of monetary policy.”
According to Claasen, tokenizing assets could have a huge impact in Africa, as small business owners would, for example, be able to tokenize business shares to allow investors to avoid going through a central intermediary, effectively making it easier to put money in and out of the business.
Investors should be cautious
However, Claasen admitted that right now Bitcoin isn’t a great alternative to fiat currencies, but added that a network upgrade will soon fix its problems. He stated:
“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.”
Notably, Claasen urged people not to invest more than they can afford in the cryptocurrency, telling investors not to think of Bitcoin as cash but as a “digital form of gold” that helps them “save outside of the current financial climate.” Bitcoin’s volatility, according to him, is caused by unsophisticated investors who make decisions about its long-term future based on articles that may or may not be true.
Regarding worries that Bitcoin is used for tax evasion and money-laundering, Claasen stated that a recent European Union report suggested that there isn’t a lot of large-scale criminal behavior going on. Moreover, it isn’t completely anonymous, and anyone can analyze blockchain transactions if needed.