How did we get here?
(Image source: artprintfile.com)
A journey through the evolution of money, from barter to bitcoin!
Money plays a crucial role in our daily lives by promoting trade, fostering economic expansion, and acting as a store of value. The development of money in Uganda, from the oldest forms of barter to modern digital currencies like Bitcoin and other cryptocurrencies, is a fascinating story of creativity and innovation. In this blog, we'll travel back in time to see how money has changed up until the emergence of cryptocurrencies in Uganda.
Before the invention of money, people relied on a system known as barter to exchange goods and services. In this system, individuals traded items they had for items they needed, and the items exchanged included bananas, millet, hides, ivory, and beads, among other items. While barter worked to some extent, it had significant limitations. It required a double coincidence of wants, meaning both parties had to desire what the other had to offer. This made trade cumbersome and inefficient.
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The Nascence of Cowrie Shells:
Arabs introduced cowrie shells (also known as "ensimbi") to the region of East Africa when they arrived at the coast. The shells were strung together in groups of 40 or 100, each group symbolizing a dollar with 50 or 20 strings. As coins, there were also shells that had been sliced into rings with an opening in the center. These shells facilitated both slave and long-distance trade.
Before the introduction of cowrie shells, a blue bead, nsinda, was used; this was very rough and poorly made, but it was considered to be of great value; one bead was equal in value to one hundred cowrie shells," wrote John Roscoe in his book The Baganda, which was first published in 1911.
Still earlier, before the bead was invented, a tiny ivory disc known as a singa was utilized; one of these discs was worth 100 cowrie shells.
(Image source: National Museum of African American History & Culture website)
Roscoe also stated that "two cowrie shells would purchase a woman." He gives the value of currency and further states that during the reign of King Suna Kalema (1832–57)... " A cow was equivalent to 2,500 cowrie shells. Five goats were exchanged for a cow.
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Enyondo writes in a paper published in the Bank of Uganda: 40 Years of Service (1966–2006) newsletter, "With this kind of uncertain coinage, the money supply could not be determined or controlled because cowrie shells were gathered from the shores without much effort and by anybody who cared to take the time to do it. The core central bank function of issuing this legal tender currency was left in the hands of nature."
Later, the British established the British pound, with an exchange rate of 100 British pounds for 1500 rupees and 1,000 cowries for one rupee. Around 1888, the Imperial British East Africa Company (IBEAC) took control of East Africa. A rupee, a half-rupee, a quarter-rupee, and a two-anna piece in silver, as well as a copper piece or farthing, were adopted as the new units of money. A rupee was equal to 64 pieces, which were equivalent to 16 annas.
Because it was difficult to maintain trade when there were numerous currencies on the market, the British started a currency reform that resulted in the abolition of the IBEAC currencies. The rupee was valued at one hundred cents before this revision. Cents were first introduced and widely used in the early 1900s.
Later, the East African florin, which was equivalent to one rupee and 10 of which made up a pound sterling, was introduced. The Ugandan shilling replaced the florin as legal cash and has remained so ever since December 1931.
(Image of 1000 Ugandan shilling note : Source; Business Insider Africa)
The birth of digital money:
As computers and the internet became more widespread, financial transactions moved from using actual money to using digital records. The way we access and use money has been transformed by credit and debit cards as well as internet banking. The creation of Bitcoin in 2009 under the pseudonym Satoshi Nakamoto by an unidentified person or group marked a crucial turning point in the history of money. Blockchain technology, which powers the decentralized digital currency Bitcoin, enables safe and transparent peer-to-peer transactions without the need for third parties like banks. This innovation has sparked the development of thousands of other cryptocurrencies, each with its own unique features and purposes.
(Image source: openaccessgovernment.org)
In Uganda, the initial reaction from government officials and financial institutions was cautious. Cryptocurrencies were largely seen as a novel and risky venture. Regulators and policymakers raised concerns about their potential use in illegal activities, such as money laundering and fraud, but despite the initial skepticism, interest in cryptocurrencies continued to grow in Uganda. This led to the emergence of cryptocurrency exchanges—platforms where Ugandans could buy and sell cryptocurrencies. One of the earliest and most influential exchanges in Uganda was Binance, which opened its doors in 2018. Binance's entry into the Ugandan market marked a significant milestone, as it provided a secure and user-friendly platform for Ugandans to trade cryptocurrencies. In 2019, the Ugandan government issued a public warning about the risks associated with cryptocurrencies and advised citizens to exercise caution when engaging in cryptocurrency trading as a prudent move to educate the public about the potential dangers of speculative investing. Despite this warning, the popularity of cryptocurrency exchanges continued to grow in Uganda, with more platforms entering the market to meet the increasing demand. These exchanges not only offered a convenient way for Ugandans to invest in cryptocurrencies but also provided opportunities for financial inclusion and economic empowerment in a country where traditional banking services are limited. investing in cryptocurrencies.
Regulators in Uganda started to understand the potential advantages of cryptocurrencies and blockchain technology over time, though. The Financial Intelligence Authority (FIA) of Uganda suggested new rules in 2020 with the intention of bringing cryptocurrency enterprises under the jurisdiction of laws against money laundering and the financing of terrorism. This denoted a change in direction toward a more fair method of governing the Bitcoin market in Uganda.
Today, a large number of Ugandan businesses have embraced cryptocurrencies and accept payments in Bitcoin for services provided. Facilities have also been established by startups like Zeroday Intel to support the development of similar technology.
Uganda is well-positioned to use the transformative potential of blockchain technology for the benefit of its people as it deepens its foray into the cryptocurrency realm. With ongoing training, sensible regulation, and a commitment to innovation, Uganda's cryptocurrency story is one of hope and opportunity in the digital age.
Wrtten by;
Mugerwa Joseph
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