In speaking about cryptocurrencies or virtual currencies, several ideas come to mind: That you need an Internet connection, that it is difficult to obtain and use, if it is legal, what should one know about investing and management, and be aware of how to use it. But when one thinks of this in a country with technological barriers and financial education limitations such as Colombia, other limitations come to mind, for instance, needing technical knowledge to make use of this currency.
More than a buzzword, this refers to a whole range of technological developments that use cryptography, a technique used to protect information when in transit and that can only be undeciphered by someone with a secret code. This technology is applied to a currency that works only digitally and does not have equivalent physical assets such as gold, coins, or bills.
According to Coin Market Cap, currently, there are close to 2,253 cryptocurrencies in the market, such as Bitcoin –the most popular– with a capitalization in the market of more than US$ 220,000M and with which a person without having intermediaries such as banks, can carry out any kind of transaction through the web.
For coming from blockchain technology, cryptocurrencies allow all entities connected, exchanging information to have a record of the operations being carried out simultaneously, hindering counterfeiting or intentions of fraud.
“When a transaction is carried out in traditional accounting terms, there is a ledger where the transactions are recorded. However, any person can change the accounting system making it vulnerable, something impossible in blockchains, as it produces thousands of copies and tapping into them carries a very high computational cost,” said Universidad Nacional de Colombia (UNal) Business Administration M.Sc. Camilo Arturo Fajardo Gartner, who in his research project shows the main factors that influence the intention of use of cryptocurrencies from the behavior perspective of a consumer in Bogotá.
According to Fajardo, these elements have been analyzed in different models that research using these types of technologies: “In our research, we highlight some of the technological complexities for its use and an uncertain social perception over its use, even beyond its inherent risk.
In his project, he analyzed models directed towards the use and appropriation of these types of technologies based on 5 previously chosen constructs (theoretical construction to solve a determined problem) and assembled a survey of 103 cryptocurrency users in Colombia.
The defined constructs were:
One of the main results is that the risk perception negatively impacts the intention of using cryptocurrencies, as the greater the risk, the less intention to use.
This transactional alternative appeared for the first time in 2009 when a person in the USA purchased a pizza with bitcoins, which –according to the researcher– catapulted this technology. However, despite the boom around this in the last years, in Latin America, it continues to be a matter not discussed much, as for many people it is something illegal or illegitimate.
Although some entities such as the World Bank and other financial institutions suggest that for Colombia to maintain its rating it needs to establish basic rules for controlling this technology. The Colombian legislation is not clear on the use of cryptocurrencies.
The simplest manner to purchase cryptocurrencies is through companies that act as intermediaries: “They work similarly as when you invest in shares, as the person can buy a certain amount, depending on the fluctuation of the cryptocurrency at that time.”.
Another use lies in knowing how to “mine” or create new cryptocurrencies; therefore, using hardware many blockchain operations and computer processes with special algorithms are validated that generate more cryptocurrencies. However, this process is much more complex and requires great computational resources.
Another way to earn money with them consists of exchanging cryptocurrencies. However, this still has many legislative restrictions as people need to receive and deliver both cryptocurrencies as well as money of the currency of the country in which they decide to carry out the transaction.
As being a disruptive technology, this technology is based on trust users have over it, as people have with their money in a bank account, despite not having it physically.
According to a Binance Research study known as the “2021-Crypto User Global Index,” which looks to become cognizant of the uses and preferences of digital currencies in the world, 52% of the users see it as a means of income. However, it adds that this is not based on traditional economics, where assets were supported by gold, coins, or value certificates, among others.
The trust issue is the Achilles heel of this technology. If people lose trust over cryptocurrencies, it immediately loses the value it represents, or it can be significantly reduced; meaning that if a person invests great deals of money in this, he/she can lose it in a blink of an eye.
For Fajardo, this technology does not require a very ample technological infrastructure, but rather legislation and control, so it can be more legitimately implemented in Colombia in time.
“Cryptocurrencies are becoming increasingly common in different countries, and blockchain technology will be commonplace, therefore Colombia is not far from looking into this form of transaction,” finally said Fajardo.
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