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Facebook’s Libra cryptocurrency could give teeth to Blockchain

Facebook’s Libra cryptocurrency could give teeth to Blockchain

By Faith Ngwenya.

Mid-month June, Facebook announced its plan to launch its Libra cryptocurrency in 2020. Bitcoin, the popular digital currency, has been around for over 10 years but hasn’t significantly changed how we trade.

However, Facebook’s massive global user base could usher in wide-scale adoption of Blockchain, the technology behind modern cryptocurrencies.

Blockchain is just one of the 4th Industrial Revolution topics being presented at SAIPA’s Accounting iNdaba 2019, to be held from 13 to 15 August at the Cape Town International Convention Centre. So it’s a good time to review the technology in layman’s terms.

What problem does Blockchain solve?

With physical money, each unit represents a quantity of value traded and therefore redeemable as goods and services. It’s tightly controlled to ensure its units are uniquely identified and resistant to duplication. Because it’s physical, only one person at a time can possess and spend it.

Digital currency is simply a computer file that can be copied, so the same unit could be spent at the same time by different people. To prevent this, all transactions and subsequent ownership of a unit must be validated through a central third party. This incurs unnecessary fees and exposes our private data and financial history to someone else, like a bank. Blockchain tries to solve this problem.

The Blockchain file

A Blockchain is firstly a file on your computer that contains batches (or “blocks”) of transactions. Each block is linked to the previous one by a unique digital serial number computed from the contents of both blocks and a bit of cryptographic magic. This is the “chain”.

Because the serial number is based on the previous block, if past transactions were changed, the serial numbers would no longer agree, signalling that tampering had occurred. Tracing the discrepancy is accomplished by checking all the serial numbers down the chain until the first mismatching block is found. This makes a Blockchain resistant to amendment.

Transactions are entered and maintained through a Blockchain management program, also installed on your computer.

The Blockchain network

A Blockchain file becomes useful for transacting when it is shared with other parties over a network. A Blockchain network is like a social network, but instead of exchanging personal news and photos, its users exchange a digital asset, like cryptocurrency.

To avoid needing a centralised database, everyone on the network gets a synchronised copy of the Blockchain file. So their file holds their transactions and everyone else’s! But transactions are individually encrypted, exposing only their values to other users.

Validation

Each block submitted to the Blockchain is validated by any computer on the network with the most available computing power at the time. This ensures that transacting parties have proper credentials and sufficient currency to spend and that no single computer can take control of the validation process. Each computer then updates its file with the successfully validated block.

That’s a very basic description of Blockchain and is intentionally flawed for simplicity’s sake.

The benefit of Blockchain

Because the network shares transactions in a self-validated and secure manner, there’s no need for a middleman. Although each validator earns a nominal fee, the cost is lower than banking fees. Also, ownership of a specific unit of currency is inherently tracked by the system so there’s no danger of double spending.

Although Facebook will use Blockchain, its mechanics may differ from those described above. More significantly, Libra could be the first large-scale cryptocurrency that offers a viable alternative payment platform to rival incumbents like MasterCard and Visa.

SAIPA’s role

Professional Accountants should have at least a basic understanding of how Blockchain and other new technologies work. As their role of trusted business advisor becomes the focus of their services and more of their clients embrace 4IR, they will encounter scenarios where these technologies are being implemented, should be implemented or should be avoided. Knowing how to approach each is important to winning a client’s confidence and adding real value to their operations.

SAIPA and its parent body, IFAC, continue to prepare our Professional Accountants for this and other innovations changing the face of the Profession. We’re already developing advanced standards to ensure the public interest continues to be protected even when dealing with sometimes impenetrable technologies.

The theme of our Accounting iNdaba 2019 is “The Future-Ready Professional Accountant in the 4th Industrial Revolution”. The event will set the tone for our coming initiatives to equip the industry for change. Accountants from all professional bodies are welcome and can book their place at the iNdaba at www.saipa.co.za/accounting-indaba-2019.


Caption: Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA).


Following reverse listing, public can now acquire shareholding in Paratus Namibia

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20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.