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Sudan Dared to Be Free, Then the Military Arrived

6 min read.

A statement by organizations and individuals standing in solidarity with the people of Sudan, deeply concerned about, and strongly condemning the 25 October 2021 military coup in Sudan and the subsequent suspension of several provisions of the Constitutional Declaration.

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Sudan Dared to Be Free, Then the Military Arrived

We stand in solidarity with the people of Sudan and we demand more resolute action from the African Union (AU), the Intergovernmental Authority on Development (IGAD) and the United Nations (UN)

We, the undersigned organizations and individuals, are deeply concerned about, and strongly condemn, the military coup in Sudan and the subsequent purported suspension of several provisions of the Constitutional Declaration; dissolution of the Sovereign Council, the Cabinet and of the Transitional Government of Sudan. We further condemn the arrest and detention of the Prime Minister, Abdalla Hamdok, his wife, five ministers and other government officials and leaders as well as civil society actors. These actions violatethe AU Shared Values and specific provisions of the African Charter on Democracy, Elections and Governance regarding unconstitutional changes of government. We note that the military takeover has negative consequences for Sudan’s transition into a democracy, a journey that had a major turning point in 2019 when civilians got rid of dictator Omar Hassan Al-Bashir through a peoples’ revolution.

We also note with concern the switching off of the Internet and other communications channels, which has made it difficult for the Sudanese people to receive and send information within and outside of Sudan. We are also greatly troubled by the closure of the Sudanese airspace and land borders, and suspension of all flights. This has meant that no one can travel into or out of Sudan. These limitations on the rights and freedoms of the Sudanese people as well as other nationalities present in Sudan is in stark violation of both the Sudanese Constitution as well as African and International Human rights norms.

We are aware that many Sudanese, committed to democratic ideals that they relentlessly fought for, have taken to the streets to peacefully protest the military takeover. We are, however, alarmed by reports appearing in a section of the media of the killings, torture and injuries of some of the protesting civilians by sections of the military.

As African citizens and institutions from across the continent and its diaspora, we demand that:

  1. General Abdel Fattah Abdelrahman al-Burhan and the parts of the military leadership under his control immediately and unconditionally release Prime Minister Hamdok, his wife, the ministers, other government officials and members of civil society;
  2. This impugned military leadership transfers the leadership of Sudan back to the transitional government to operate as per the terms of the Political Agreement and the Constitutional Declaration of 17 July 2019 and 4 August 2019 respectively, and further that the entire provisions of Constitutional Declaration be respected and implemented;
  3. Patriotic soldiers, battalions and garrisons desist from participating in or supporting the illegal martial government in any way, and certainly refrain from interfering with or harming peaceful protestors.
  4. We call for the protection of civilians and the upholding of their right to protest and further call on the security forces to act with restraint in managing the public order situation in the Sudan. Specifically, we call on security forces to desist from use of force on civilians, as this is contrary to international law and also the various legal instruments created by the African Union;
  5. We demand that this military leadership also lifts the restrictions on Internet access and use to enable people to communicate freely and access information;
  6. We further demand that this military leadership also immediately opens up the airspace to enable travel into and out of the country without restrictions.

We note that the unconstitutional change of government that was perpetrated in Sudan has had a long build up, whose signs include the failed coup of 21 September 2021. The position of the African Union on Unconstitutional Change of Government is very clear, and requires an uncompromising rejection of such unconstitutional changes, the immediate suspension of the Member State in question, and immediate engagements, based firmly on AU law to reinstate democratic and legitimate government. We note with concern that, in the face of clear danger, the AU has dithered to implement this hard letter of the law on a few occasions in the last few years, a fact that might have encouraged the current situation in Sudan. While we are grateful that both the AU and IGAD provided initial public statements on the situation in Sudan, their statements were not strong enough. We also acknowledge that the Peace and Security Council of the African Union (AU-PSC) held a Session on Sudan and has suspended its Government in line with the applicable AU law. This is a positive first step. We reiterate that speaking clearly and strongly against the unconstitutional change of government is the only way in which large-scale violence and related human suffering can be averted.

As African citizens and institutions from across the continent and its diaspora, we therefore demand that AU and IGAD:

  1. Follow up on their initial Statements with more robust Statements that demonstrate the actions they have taken in the first 48 hours after the coup and that clearly lay out the obtaining law and the processes that they propose to take in the next few days;
  2. Confirm unequivocally to the people of Africa and the international community that Sudan currently stands suspended from the AU, pending these processes;
  3. Urgently convene the AU Peace and Security Council (AU-PSC) and take the necessary follow-up measures.

We note that the Horn of Africa is already very volatile and that should Sudan be allowed to succumb to military-instigated conflict against a resistant citzenry, not only will there be unnecessary bloodshed and human suffering, but this would also have profound regional peace and security repercussions, affecting neighbours like the Central African Republic (CAR), Chad, Eritrea, Ethiopia, and the rest of the East African region. We note the strong Statements already issued by the United Nations Secretary General and several members of the international community. We also acknowledge that the United Nations Security Council (UNSC) has convened a Session on Sudan. We call upon the United Nations (UN) to: –

  1. Prioritise discussion and action on Sudan, respecting the aspirations and demands of the Sudanese people, and bearing in mind the potential ramification for the Horn and East Africa region.

As African citizens and institutions from across the continent and its diaspora, we will continue to be actively seized of this matter and will be making additional interventions and actions in the coming days. More importantly, we call upon all people around the world to unite and stand together with the brave Sudanese people to save and preserve their democratic transition and protect their human and peoples’ rights. We urge for peaceful demonstrations and protests outside Sudanese Embassies across the continent and worldwide.

Signatories

A – Institutions 

  1. Advocacy Network for Africa, Washington DC, USA
  2. AfricanDefenders (Pan African Human Rights Defenders Network)
  3. African Union Watch, Banjul, The Gambia
  4. African Women and Youth Initiative
  5. African Women’s Development and Communication Network (FEMNET)/ Réseau de Développement et de Communication des Femmes Africaines
  6. African Women Leaders Forum (AWLF), Zimbabwe
  7. Atrocities Watch Africa (AWA), Kampala, Uganda
  8. Chapter One Foundation, Lusaka, Zambia
  9. Coalition for an effective African Court on Human and Peoples’ Rights (ACC), Arusha, Tanzania
  10. Coalition Togolaise des Défenseurs des Droits Humains (CTDDH), Lomé, Togo
  11. DefendDefenders (East and Horn of Africa Human Rights Defenders Project)
  12. Disability Amalgamation Community Trust (DACT), Zimbabwe
  13. DITSHWANELO – The Botswana Centre for Human Rights, Gaborone, Botswana
  14. Eastern Africa Youth Empowerment on Peace and Security
  15. Echoes of Women in Africa Initiatives, Nigeria
  16. HUDO Centre, Kampala, Uganda
  17. Human Rights Institute of South Africa (HURISA)
  18. Institut des Médias pour la Démocratie et les Droits de l’Homme (IM2DH), Lomé, Togo
  19. Institute for Young Women Development (IYWD), Zimbabwe
  20. International Refugee Rights Initiative (IRRI), Kampala, Uganda
  21. Inuka Kenya Ni Sisi!, Nairobi, Kenya
  22. Kamma Organization for Development Initiatives (KODI), Sudan
  23. Kenya Human Rights Commission (KHRC), Nairobi, Kenya
  24. Nawi – Afrifem Macroeconomics Collective, Nairobi, Kenya
  25. Network of Independent Commissions for Human Rights in North Africa
  26. Nubsud Human Rights Monitors Organization (NHRMO), Sudan
  27. OnetoAll Foundation, Meru, Kenya
  28. Open Society Initiative for Southern Africa (OSISA), Johannesburg, South Africa
  29. Oromo Legacy Leadership and Advocacy Association
  30. Oromo Professionals Group (OPG), Washington DC
  31. Rape Hurts Foundation, Uganda
  32. Pan African Citizens Network (PACIN)
  33. Pan African Lawyers Union (PALU), Arusha, Tanzania
  34. Pan African Law and Justice Initiative, Kenya
  35. Panos Institute Southern Africa
  36. Plateforme de la Diaspora Tchadienne en Amerique
  37. Southern Defenders (Southern African Human Rights Defenders Network)
  38. Wakiso District Human Rights Committee , Uganda
  39. Yearning Voices Foundation (YVF)
  40. Zimbabwe Lawyers for Human Rights, Harare, Zimbabwe

B – Individuals 

  1. Abel K. Walendom, Co-Facilitator, Plateforme de la Diaspora Tchadienne en Amerique
  2. Abdalla Komi Kodi, Executive Director, Kamma Organization for Development Initiatives (KODI), Sudan
  3. Achieng’ Akena, PanAfricanist, Uganda
  4. Adaobi Egboka, Human Rights Lawyer, Nigeria
  5. Arnold Tsunga, Human Rights Lawyer, Zimbabwe
  6. Brian Tamuka Kagoro, Uhai Africa Ltd, Harare, Zimbabwe
  7. Bridget Musungu, Panafrican, Nairobi Kenya
  8. Bushra Gamar Hussein, Executive Director, HUDO Centre, Kampala, Uganda
  9. Bonaventure N’Coué MAWUVI, Journaliste et Défenseurs des Droits Humains, Lomé,Togo
  10. Chidi Anselm Odinkalu
  11. Chris Kwaja
  12. Danford M. Chirwa, Dean, UCT Law
  13. Donald Deya, Pan Africanist, Nairobi, Kenya
  14. Dzimbabwe Chimbga, Human Rights Lawyer, Zimbabwe
  15. Edigah Kavuravu, Human Rights Lawyer, Kenya
  16. Femi Falana SAN, Human Rights Lawyer, Nigeria
  17. Feyi Ogunade, Human Rights Lawyer
  18. George Kegoro, Lawyer, Nairobi, Kenya
  19. Gitahi Githuku, Human Rights Defender, Nairobi, Kenya
  20. Golda Keng, Advocacy and Campaigns Consultant, Yaoundé, Cameroon
  21. Hakima Haithar, International Development Consultant, Johannesburg, South Africa
  22. Ibrahima Kane: Ibrahima Kane, lawyer Senegal
  23. Irene Mwendwa, Lawyer, Pollicy Uganda
  24. Jok Madut Jok, Professor of Anthropology, Syracuse University and Director of The Sudd Institute
  25. Khabele Matlosa
  26. Martin Masiga, Africa Judges and Jurists Forum (AJJF)
  27. Martin Mavenjina, Constitutional and Human Rights Lawyer, Nairobi, Kenya
  28. Musa Mwenye, SC, Former Attorney General of the Republic of Zambia
  29. Nikiwe Kaunda, Mzuzu, Malawi
  30. Otto Saki, Zimbabwe
  31. Roland Ebole, Human Rights Lawyer, Nairobi, Kenya
  32. Roselyn Hanzi, Human Rights Lawyer, Zimbabwe Lawyers for Human Rights
  33. Sarah Mukasa
  34. Sharon Nakandha, Lawyer, Uganda
  35. Siphosami Malunga, Executive Director, Open Society Initiative for Southern Africa
  36. Tiseke Kasambala, Chief of Party, Freedom House, Johannesburg, South Africa
  37. Vusumuzi Sifile, Lusaka, Zambia
  38. Washington Katema

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Misery and Magic Fuel Mayhem in Cafunfo

A new book from celebrated Angolan journalist and activist Rafael Marques reveals why a supposedly “peaceful protest” in a diamond-rich but dirt-poor north-eastern town, erupted into bloody violence and shocked the nation.

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Angola: Myths and Realities About the Quality of Education

Amid public outrage, there were claims that the security forces had used excessive force against peaceful demonstrators – but the truth lay elsewhere. “Within a day of the news of terrible bloodshed during a protest march in the diamond-mining town of Cafunfo, some people had already drawn conclusions”, says Rafael Marques.  “It took me months of investigation to get to the truth.”

The undisputable facts were these:  when participants in a banned march clashed with security forces in Cafunfo on 30 January 30 2021, at least a dozen people were killed and many more were injured.  Two members of the security forces were lucky to survive a gruesome assault by multiple protestors wielding scythes and machetes.

Over nine months of meticulous inquiry, award-winning journalist and activist Rafael Marques gathered the evidence into a new book that reveals how traditional belief in magic was a major factor in mobilizing a vulnerable and illiterate group of people and inciting them to commit violence.

The author of several books and reports on this remote and troubled area, Marques made repeated visits and spent a total of 40 days on the ground collecting testimony from over 100 witnesses, including demonstrators and security force members, to determine what really happened.

The result of those months of painstaking inquiry is his new book Misery and Magic fuel Mayhem in Cafunfo.  It is a comprehensive account of what led to the unsanctioned demonstration and how the tragedy unfolded.

Sifting alternative versions of the ‘truth’

With meticulous attention to detail, Rafael Marques lays out the context behind the march. How decades of neglect and underdevelopment have led to hunger, poverty and desperation. How cynical local figures distorted regional history to make a flawed case for autonomy. How leaders of this banned separatist movement manipulated locals into believing the world was watching as they paraded their anguish. And how these same leaders organized two days of fasting with shamans conducting “magic” rituals to convince those on the march that they were immune from harm and could fly away.

Locals said more than 20 people were shot and killed – the authorities say it was six. Rafael Marques’s investigation found that at least 13 people were confirmed to have died while at least 16 were injured and six people remain unaccounted for.  However, he cautions that this is not a “definitive number” given the “highly confused situation” on the ground.

The contrasting accounts of eyewitnesses – both those who took part in the protest and members of the security forces – speak for themselves. Marques impartially and faithfully records their version of events as well as that of the authorities who claimed they came under unprovoked attack.

Diamonds and despair

Marques’s book was officially launched on 18 October in Cafunfo itself.  This place is an anomaly in Angola; not officially a town or municipality, the population has grown around the extensive (and often privately owned) diamond mining operations. Little or nothing of the wealth generated has gone into providing essential services such as electricity, paved roads, piped water or into establishing a local political administration.

Nine out of every 10 residents in Cafunfo live below the poverty line, barely able to muster a single meal per day.  The absence of any state presence other than security allowed third parties to radicalise these desperate locals who were induced to believe that they were legally allowed to stage a march to publicise their situation.

In fact, the demonstration was unauthorized and in contravention of emergency laws introduced to limit public gatherings due to the COVID-19 pandemic.

Little or nothing of the wealth generated has gone into providing essential services such as electricity, paved roads, piped water or into establishing a local political administration.

Previous encounters with police and military led some participants to arm themselves with agricultural tools “for self-defence”. Scythes and machetes were used in a gruesome attack on poorly armed security forces in different locations, leaving two men hacked to within an inch of their lives.

At a third location, security reinforcements faced with a front line of protestors maddened by hunger and the rituals that made them feel invincible, finally opened fire in what they said was self-defence.

As the evidence is laid out page by page, it becomes clear that a few politically ambitious, unscrupulous individuals took advantage of an illiterate populace with traditional animist beliefs in supernatural powers to mobilize and control large numbers of people into a cult-like membership of an illicit organization and incite them to violence.

After sifting through the disparate accounts, Marques was able to establish both a chronology of events and the astonishing role played by shamans and the use of botanical, or herbal, concoctions to create the conditions for a violent confrontation.

“The magic rituals were instrumental in mobilizing the masses, most of them uneducated peasants or field workers, into a tactical command group targeted against the constitutional and political authorities.”

“Some of those who took part felt they had extraordinary powers that enabled them to use violence to confront the security and defence forces [who were mobilized to prevent the unauthorised demonstration from taking place]”.

Marques’s conclusion was that “the demonstration was not a peaceful one, and the participants’ faith in their magic powers created the condition for violence.”

Over several days, a select group of men were forced to fast, consume and apply herbal preparations they were told would make them immune to harm, and after a sleepless night of dance, prayer, incantation and in some cases the consumption of alcohol, they were sent out, before sun-up, armed with long knives and wooden staves to confront a mainly unarmed group of police and border guards charged with preventing an illegal gathering.

“Many of them were fired up, believing they were untouchable. Many were famished, had not been allowed to sleep and were in a sort of religious fervour when they set out. They were repeatedly told there would be no retreat and they had to press on.  Imagine their mental state when they encountered impromptu and makeshift attempts to bar their advance. Even in the face of warning shots fired over their heads.”

The first casualty was a police inspector, brutally hacked about the head and body. The second was a demonstrator, allegedly struck by a bullet (or alternatively hit in the head by a companion’s machete). With little or no ammunition, the police and border guards kept retreating and the marchers kept pressing on towards the main police station and security forces’ residences.  An army colonel unarmed and with his hands up, pleading for them to stop, was attacked in a flurry of flashing machetes, and left for dead.

By the time the “frontline command” reached a third roadblock, this time manned by soldiers reinforcing the hapless police and border guard detachments which had already suffered two casualties, the scene was set for all-out combat. Some survivors still claim they only got away because magic allowed them to fly over the melee into safety.

In his book Marques enumerates all the factors that led to this tragedy.  “Ignorance, misery, negligence and political incompetence created a fertile ground for radicalization in Cafunfo, and in the face of government intransigence, other political forces seized the advantage.”

Rafael Marques has organized a round-table conference of all interested parties in the region to open channels of communication and has also made recommendations for government, mining interests and local communities to improve conditions on the ground and pave the way for self-sustaining economic development to lift this neglected community out of misery and prevent any future tragedies of this kind.

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Bees in Crisis: Toxic Insecticides a Threat to Food Security

As Kenya joins the rest of the world in marking World Food Day under the theme “Our actions are our future – Better production, better nutrition, a better environment and a better life,” there is a need for a paradigm shift in dealing with the pesticide menace.

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Bees in Crisis: Toxic Insecticides a Threat to Food Security
Photo: 冬城 on Unsplash

Bees play a critical role in food and nutrition security in Kenya through cross-pollination. They are also a source of income for farmers, through products such as honey, pollen, beeswax, propolis and royal jelly. However, bee colonies are under threat from an overuse of synthetic insecticides in Kenya. These insecticides are often fronted to farmers as a viable solution towards the control of pests affecting their crops. Statistics show that between 2016 and 2019,Kenya imported 12.9 million kgs of  insecticides, worth Ksh15. 8 Billion.

Insecticides as defined by National Pesticide Information Centre are a class of pesticides that are formulated to kill, harm, repel or mitigate one or more species of insects. They act on the pests by either disrupting the nervous system or their exoskeletons.

Oblivious of their impacts on the bees and environment, farmers are increasingly using these chemical compounds on their farms to control aphids, whiteflies, thrips, locusts, bollworms and cotton stainers. A closer look at the Pest Control Products Board Website shows insecticides such as Imidacloprid (78 products) and Deltamethrin (20 products) that are scientifically known to increase the mortality of bees are registered and used in Kenya.

Aside from farmers, the government of Kenya through the Ministry of Agriculture also employed the use of Deltamethrin in the control of desert locusts in  Menengai Nakuru region between March and April 2021. This was revealed by an environmental assessment done by Greenpeace Africa.

Of critical concern is that these insecticides have been scientifically proven to negatively impact honey bees (Apis mellifera). Earlier this year, the Kenya Agricultural and Livestock Organization (KALRO) attributed the mass death of bees in Baringo to the excessive use of chemicals to control the fall armyworm. Similar to this was a 2015 study conducted in Transmara west sub county, that showed an increase in honey bee mortality and a decrease in honey yield in areas sprayed by pesticides.

Aside from the massive death of bees, Kenyan honey has also been reported to contain residues of toxic pesticides. Between September 2013 and August 2015, pesticide residues were detected in pollen and honey from honey bee hives across several regions in Kenya.

Those dealing with these dire ecological consequences of the widespread and continuous use of synthetic insecticides are smallholder beekeepers. For instance, following an aerial and ground spraying of synthetic insecticides in Samburu County in 2020, an intervention aimed at managing the swarms of desert locusts that invaded farms, there were complaints especially among beekeepers that their beekeeping enterprises were disrupted as bees fled their hives and others died from poisoning by the chemicals used. Lolmoti Ltkaruan, a beekeeper in Angata Nanyekie village, Samburu East was one of the farmers whose bee hives were affected by the aerial spraying.

Lolmoti, who is also a livestock keeper, had five hives from which he harvested honey worth KSh 4,000 from each hive, earning him KSh 20,000 per season. However, when the locusts hit, the Samburu county government in an effort to salvage crops and vegetation from the ravaging insects, used drones to conduct mass spraying of insecticides, which not only landed on the locusts but also the vegetation and the hives along with the bees inhabiting them. “Days after the spraying I noticed that four of my hives were deserted, all bees had fled; only one hive still had bees, and their numbers had significantly decreased,” says Lolmoti.

The father of seven had planned to use the money from his beekeeping enterprise to take his son who was clearing his primary education to secondary school. After the loss of his honey business, he still hadn’t figured out another source of income. This loss of livelihoods is coupled with the sad reality of Kenyan farmers being forced to pollinate their crops by hand as a result of the loss of bees.

Farmers need to be saved from this agony, by the Kenyan government and the relevant agencies such as Pest Control Products Board which are responsible for the registration and authorisation of these synthetic  insecticides.  As Kenya joins the rest of the world in marking World Food Day under the theme “Our actions are our future – Better production, better nutrition, a better environment and a better life,” there is a need for a paradigm shift in dealing with the pesticide menace.

It is critical for the Kenyan government to engage institutions of research such as, International Centre of Insect Physiology and Ecology (ICIPE) and other companies that are working to make available biofriendly pest control products and practices that will safeguard bees. Safe options such as biopesticides (insecticides and fungicides), push and pull technique, traps and protein baits will help protect bee populations, reduce pest infestation and increase food production.

For more information on bio friendly pest control inputs: https://saferinputs.koan.co.ke.

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A Word of Caution to African Investors: Bitcoin Is Worth Zero

The failure of Bitcoin as an investment arises from the fact that it is a no-yield asset that is highly volatile and untested.

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A Word of Caution to African Investors: Bitcoin Is Worth Zero

Bitcoin has received and continues to receive a lot of fervent support. Its unsteady yet linear ascent from a paltry $0 in 2009 when it was first created, to a $66,000 peak in 2021 is a testament to this fact. These sterling developments beg the question: why is Bitcoin so popular and what exactly does it do for us? Is it really all that it is made up to be or is it just a passing fad?

Dispassionate investigation into this subject led this author to the sobering conclusion that Bitcoin is definitively worth zero. This conclusion might be confusing to some – disappointing even – because the prevailing zeitgeist paints Bitcoin as a harbinger of unparalleled socio-economic revolution.

Contra this colourful prognosis, emerging truths now reveal that Bitcoin is structurally incapable of delivering on its bold promises. Bitcoin fails as a currency, as an investment, as a store of value and as a hedge against inflation – all of which have been touted as unique selling points of this nascent piece of technology. This write-up will dive deep into each of these issues and in the process dispel the erroneous belief that with Bitcoin we are on the cusp of something revolutionary. This discussion couldn’t be any more timely considering that globally Africa currently has the highest cryptocurrency adoption rate with countries like Nigeria, Kenya, Tanzania and South Africa leading from the front.

Having set the agenda, let us begin. Bitcoin fails as a currency because of two things: volatility and scalability concerns. In its 12 years of existence, Bitcoin has maintained extremely high levels of volatility i.e. 60 per cent to 100 per cent annualized. Contrast this with the US dollar, which has an annualized volatility of 17 per cent. This mercurial nature of the digital coin is problematic given that for anything to be considered a currency it has to exist within certain bounds of stability. Anything that moves 5 per cent a day, 30 per cent a month — up or down — cannot be a currency.

Pundits have tried to peg Bitcoin’s volatility to the fact that it is still in its early adoption phase. When it becomes widely accepted and new investors come on board it will settle, they say.  This sounds like a fair argument until you run the numbers and realize that at higher levels of capitalization, Bitcoin’s volatility compounds. Simply put, the more people buy Bitcoin, the more unstable it gets.

The scalability issue, on the other hand, is quite straightforward. Bitcoin’s high energy consumption levels (700 KWh per transaction) render it incapable of satisfying the day-to-day monetary needs of entire populations. That and the fact that it is also painfully slow. It takes on average 10 minutes for a transaction to be verified on the Bitcoin network. This means that if you decide to buy a cup of coffee on the side of the road, you would have to wait a whole 10 minutes for the transaction to be completed.

The more people buy Bitcoin, the more unstable it gets.

Attempts have been made to resolve this problem without undermining the integrity of Bitcoin’s infrastructure under the “Lightning Network” project without any due success. Vitalik Buterin, a co-founder of the cryptocurrency Ethereum, notably stated that no crypto can be safe, scalable and decentralized at the same time. He called this the “Blockchain Trilemma”.

Surprisingly, there have been claims that Bitcoin is extensively used as a currency in El Salvador. This is very misleading. The dominant currency and unit of account in El Salvador is still the US dollar. The use of Bitcoin in that country is primarily for remittances by citizens working abroad to their families back home. These citizens rely on Bitcoin for cross-border money transfers to avoid the high costs that come with such transactions, and also because most citizens of El Salvador, i.e. 70 per cent, don’t have bank accounts. This does not make Bitcoin a currency. It is also worth noting that because of its volatility, Bitcoin is not a reliable medium for cross-border money transfer.

The failure of Bitcoin as an investment arises from the fact that it is a no-yield asset. This means that investors have no expectations of making any future earnings except through engaging in zero-sum games with other speculators. Warren Buffet, one of Bitcoin’s biggest critics, weighed in on this saying, “If you buy something like Bitcoin, you don’t have anything that is producing anything. You’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more.”

Basically, sentiment is what drives Bitcoin’s price action. The coin itself has no intrinsic value – it is worth zero. Therefore, given the foregoing, referring to Bitcoin as a pyramid scheme would not be too farfetched. A common rebuttal to this point by economic dilettantes is that the stock exchange might as well be considered a pyramid scheme because people buy low hoping to sell high to the next person. This is a poor comparison because companies listed on the exchanges are actually producing something. Ergo, investors can expect returns on their investments without having to speculate in the markets.

The failure of Bitcoin as an investment arises from the fact that it is a no-yield asset.

Moving forward, Wikipedia defines a store of value as “an asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved. More generally, a store of value is anything that retains purchasing power into the future.” In simple terms, a store of value is a place to safely put your wealth where it won’t depreciate. Traditionally, gold and silver have been used as the preferred stores of value because of their long-term stability, durability and desirability.  So, why can’t Bitcoin match or even supplant gold as the preferred store of value? Simply because it is volatile and untested. These two factors take Bitcoin out of the running.

Get this: on May 19th 2021, Bitcoin dropped by 31 per cent in a matter of hours after Tesla CEO, Elon Musk, publicly voiced his concerns over its enormous energy consumption levels. These sudden drawdowns are exactly why Bitcoin makes for a terrible store of value. A true store of value does not drop by 54 per cent in 1 month, as Bitcoin did in the May-June period.

Secondly, Bitcoin fails as a store of value because it is untried and untested, having been in existence for only 12 years. Compare this with gold, which has been a constant fixture of human civilization for over 5,000 years. The transient nature of technology makes it difficult for us to know for how long Bitcoin will be around. What happens to investors’ wealth if a better alternative to Bitcoin materializes in the next 5 years? Evidently, redundancy is a real risk.

Bitcoin has also been presented as an all-encompassing solution to printer-happy governments notorious for increasing the general money supply whenever they feel like it. These actions usually cause inflation and lower the purchasing power of money, thereby leaving ordinary citizens in dire straits. Since the total supply of Bitcoin is capped at 21 million tokens, governments can’t print any more of them, alas. Inflation problem solved, right? Not quite.

A true store of value does not drop by 54 per cent in 1 month, as Bitcoin did in the May-June period.

While the attempts to end years of state-sanctioned madness are admirable, the notion that Bitcoin is a hedge against inflation is mostly false. The two variables are unrelated. Bitcoin only responds to capital inputs from its adherents, meaning that it marches to the beat of its own drum. Think about it like this: what would happen if, during a recession, investors responded by moving their money out of Bitcoin into safer assets? After answering this question how can you then, in good conscience, still regard Bitcoin as a reliable hedge against inflation?

On a different plane, I would like to address an unsettling observation I made about the Bitcoin community. Many of these investors are, for the most part, oblivious of the financial risk to which they have exposed themselves. To them, Bitcoin is an infallible colossus, and anything outside of that reality is simply ignored. The half-truths and hive mind-set that has entrenched itself in the crypto space is to blame for this major lapse in judgement. This insidious monoculture has ensured that any attempts to question Bitcoin’s legitimacy are met with strawman arguments, hostility and sour rejoinders. How unfortunate. Perhaps the sagacity of Nassim Nicholas Taleb, an eminent risk analyst, will help get through to this unwavering crowd: “When you invest you must focus on what can go wrong, not what can go right.”

According to market predictions, Bitcoin is expected to hit the US$100,000 mark in the near future. Whether that happens or not has no bearing on the intractable truths articulated here. Bitcoin’s worth is still zero, and one day the bubble will pop. This could happen tomorrow, or fifty years from now. Nobody really knows when.

The main take away from all of this is that you don’t want to be the dupe left clutching at their pearls when it happens.

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