The awareness of Bitcoin in Nigeria is on the rise. Many young people have heard of Bitcoin either via ads or get-rich seminars promising millions. But very few people understand what it really is. Those that do will most likely charge you some money to show you how to leverage this cryptocurrency phenomenon sweeping the globe.
In reaction to that, we thought to start this series to help you understand what Bitcoin (cryptocurrency) is, how to invest in it and how to avoid potential frauds (they really are many!)
Every young adult who is internet savvy or spends a considerable amount of time online must have at one time or the other, heard about Bitcoin or Ethereum. They are digital currencies very few people have a clue about. These digital currencies are disrupting the financial sector on a global scale and changing the way we transact in our daily lives.
What you’ve most likely heard is 1 Bitcoin being valued at thousands of dollars. That is not far from the truth.
As at the time of writing this, 1 Bitcoin = USD$11,627 = N4, 185,903.
So how did the value of 1 Bitcoin grow from less than $100 a piece in 2011/2012 to over $11,000 in a space of 5 years?
What are cryptocurrencies?
Cryptocurrency was initially developed as a “peer-to-peer Electronic Cash System” by Satoshi Nakamoto and introduced to the world via an online announcement.
“Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority.” – Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
Who is Satoshi? No one knows for certain if this is an individual or a group of people as no person or group of persons have come out publicly to identify themselves beyond doubt. Surprisingly, Satoshi remains anonymous till today!
Notwithstanding, cryptocurrencies have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.
According to Wikipedia, cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions, to control the creation of additional units, and to verify the transfer of assets.
Simply put, it is a means of value exchange associate with the internet, that employs cryptography to convert information into a near impossible to crack code that is then used to track purchases and transfers
The most popular cryptocurrency Bitcoin, was the first cryptocurrency in existence that was created in 2009 by Satoshi. Over time, additional “cryptos” have been created.
As of today, there are over 1,000 available on the internet including Ripple, Litecoin, Dash, Monero. Augur and waves to name a few but the two most popular and by far the most valuable remain Bitcoin(btc) and Ethereum (eth).
So how does it work?
Cryptocurrencies work using a revolutionary technology called Blockchain.
The Blockchain is made up of a network of “nodes” or computers interconnected to one another. This allows for multiple instances of information or blocks in different nodes for a decentralized information storage and update system that is transparent and virtually impossible to hack. It works more as a distributed ledger platform where everyone can view information but only verified authors can make changes.
Although Blockchain technology came into being as a result of the crypto-currency Bitcoin, it is already being described as the next big thing after the internet. Business leaders are already looking beyond its primary financial based and digital currency driven applications.
Blockchain came to prominence in 2016 and this spurred a lot of research into its potential applications with some already in the test phase. Already there is an increase in the demand for blockchain developers and 2018 will see the introduction of technology built on the decentralized blockchain system.
Understanding cryptocurrency and how it works can be a full day’s task so we’ll leave you to digest this and in our next article give you a step-by-step guide to investing in the top two cryptocurrencies Bitcoin and Ethereum.
What are your thoughts on investing in cryptocurrencies, are you currently trading bitcoin? What’s your opinion about the adoption of a decentralized unregulated currency not controlled by government?
Share your thoughts in the comments section below!