You have probably read or heard about the idea of a “cashless economy” and wondered why the need for one or how exactly It can be done. Well, change is a constant and just as with all other parts of the economy the banking sector has experienced changes attributed to the rapid advancements in technology. The conceptualization of a cashless economy has been mostly manifested by crypto-currency.
WHAT IS CRYPTO CURRENCY?
A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
To put it in the simplest of terms crypto-currency is digital money mostly traded in through the internet.
There various forms of Crypto-currency up to 700. The most popular forms include Bitcom and One coin.
HOW DO CRYPTO – CURRENCIES WORK?
Transactions with Cryto currency occur through the use and exchange altcoins which are independent from formal banking systems. The currency is valued against the known paper or fiat money and the same crypto-currency appreciates depending on the demand by private individuals to buy specified amounts of it. The more demand a particular form of crypto-currency gains the more it appreciates in value.
IS CYPTO-CURRENCY REGULATED AND IS IT LEGAL CURRECNCY?
Some countries have straight out rejected the use and application of this form of currency such as Uganda while others have adopted a taxing mechanism for it to be taxable as property of private individuals such countries include the United States of America. Since it’s a form of currency that operates outside the known banking system of countries there have been challenges in many countries to grant it legal basis.
WHAT IS THE RELEVANCE OF CYPTO-CURRENCY?
The founders of crypto-currency are of a view that it is time to embark on having a more secure currency , a currency that enables better and faster transactions in trade across borders , a currency that encourages more value for the private owners and lastly a form of currency that reduces the cost of international trade which involves exchange of various forms of Fiat or paper money into other known paper currencies when travelling around the world that has often led to people losing money amidst travel and trade.
STATUS IN UGANDA
As stated previously, crypto currency is not recognized in Uganda as legal tender, the Central Bank (Bank of Uganda) issued the following notice to the public recently informing everyone that crypto currency is not recognized or considered money or legal tender in Uganda and any dealings in it are outside of the law and the purview of the Central Bank and therefore at the risk of the individual.
Below is a recent warning by Bank of Uganda concerning crypto currency: