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It’s a been a torrid week for bitcoin and other cryptocurrencies, following China’s decision on Monday to ban all initial coin offerings. Now former South African entrepreneur Hannes van Rensburg has entered the fray by questioning the sustainability of cryptocurrencies for wider use by consumers.
Van Rensburg in 2011 sold his payments platform Fundamo to Visa six years ago for $110-million.
Speaking at a StartupGrind Cape Town event at the Cape Town Stadium last night, he said cryptocurrrencies that utilise the blockchain won’t see the same kind of adoption as credit or debit cards because of the impracticalities of settling payments on the blockchain.
“The way that cryptocurrency has been implemented with blockchain technology in my mind is absolutely not a viable consumer product,” said Van Rensburg, who now serves as senior vice president of new business development at ACI Worldwide.
“I think there are a lot of things that could happen in the back. I think there’s a lot of things that could happen around settlement of transactions and so forth, but it is a fallacy. I know people are going to shoot me but I am just a straight shooter,” said Van Rensburg.
Van Rensburg questioned the practicality of how cryptocurrency is transacted.
“Let’s just think about the way that bitcoin is transacted. If I do a transaction in bitcoin it means that before it is actually concluded with the text in the distributed ledger, 50% plus one of the participants in this ecosystem have to acknowledge that they have written it into the ledger.
“Now just consider if you were to run it as a global currency, where before you walk out of the shop having bought my packet of chips for a dollar that half the population has to acknowledge that I bought a packet of chips. It ain’t going to work in that environment,” he said.
He added that although there are other ways of implementing the blockchain, the way that blockchain functions today will not work in a consumer environment.
Cryptocurrency through the blockchain not practical, Debit and credit card system still a better solution
“I think we have to get over it. Debits and credits works quite fine and we have figured out how to do this so that we can do zillions of transactions in a second and right now I think it’s a good solution.
“I’m not saying that blockchain is not an important technology that one would use in many instances, but don’t get hooked up on the idea that blockchain is going to be a consumer-driven technology,” he cautioned.
Van Rensburg is widely regarded as one of the pioneers of mobile banking – with some calling him the father of mobile payments. In 1999 he launched Fundamo, which he claims was the world’s first mobile banking solution.
When Van Rensburg exited and sold Fundamo to Visa in 2011 for $110-million, the startup was the global leader in the provision of mobile banking solutions in emerging markets with 35 billion annual transactions in 34 countries spanning across Southern Africa, the Middle East and Asia.
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