Like every other sphere of human life in the digital era, buying and selling have also witnessed radical changes as tech-savvy people, growingly, ditch archaic, over-centralized transaction methods for newer decentralized ones. Bitcoin, invented by the mysterious Satoshi Nakamoto in 2008, brings a new narrative to this trend. In the heart of today’s guide, we are going to look at Bitcoin in Nigeria and discuss all you need to know about the popular cryptocurrency.
There’s a good chance that within the past 5 – 8 years, you might have come across terms like “Cryptocurrency”, “Bitcoin” in discussion with friends, colleagues at work, online media, and so on. Short for Crypto, the whole concept of Cryptocurrency, and Bitcoin, also referred to as BTC in short, is not new to a number of people reading this write-up but it is all Greek to many others.
If you belong to the second group, this guide contains all the information you need to know on this subject, including how to buy and sell Bitcoin. Here we go!
What Is Bitcoin All about?
Over the past year, Bitcoin has been headlined in a slew of news media around the globe due to its massive spike in value, eliciting demand from a lot of people around the world, bringing to the fore the need to regulate it, with a nasty crash coming in the wake of this spike in value. This development underscores how good technology doesn’t mean success, always. The real story, however, is the extent to which Bitcoin has been able to democratize financial systems, globally.
Though BTC is typically described as anonymous money, its blockchain is quite perfectly transparent and is open for inspection by anybody. That apparent contradiction places it as a revolutionary option for individuals all over the world to enjoy more financial freedom since BTC uses money in the same way the internet did information by bringing about indiscriminate, location-independent access to a decentralized financial system.
A cryptocurrency, Bitcoin is a digital asset that was created to work as a medium of exchange using cryptography for controlling its design and management, instead of relying on central authorities.
But it isn’t a mere cryptocurrency; the virtual currency is equally a new financial system that comprises several components. A 2008 invention by Satoshi Nakamoto (pseudonym) and released to the public shortly after then, one the essential features of Bitcoin is that it is not under the control of or ownership by any individual, government, corporation. It utilizes, extensively, cryptography and is also reliant on a peer-to-peer network.
The BTC protocol has laid out the rules of the financial system, specifying the total number of Bitcoins that can exist, including how they’re created and transferred between traders. Changing this protocol is incredibly difficult since any modification will require overwhelming consensus from its participants.
As of now, 1 BTC is valued at more than US$8,500, and in 2017, it almost peaked at US$20,000.
Bitcoin software is a term that describes programs using the BTC protocol for verifying its rules as well as individual transactions. The said programs operate as nodes in the distributed Bitcoin network. Also, nodes can function as miners, so they’ll make use of cryptographic proofs of burned electricity for securing the network, which they’re rewarded with newly minted Bitcoin for.
How to Mine Bitcoin
Mining Bitcoin simply means to create it, and it is absolutely free. But what might cost you some dough are resources and the know-how needed for mining the cryptocurrency. Before we explain the procedure for mining the currency, it is apposite to state some facts:
- Only 12.5 BTC can be created (mined) every ten (10) minutes.
- Bitcoin quantity is finite as there can be only 21 million Bitcoin in existence.
- Satoshi Nakamoto, Bitcoin creator, is believed to own 1 million of Bitcoin
- The overall amount of Bitcoin in circulation in July 2017 was believed to be around 16.4 million.
- By 2041, the 21 million cap on the quantity of BTC is estimated to be reached
Having got that out of the way, mining Bitcoin is a process that is quite complex, capital and energy-intensive because it needs powerful hardware, constant power supply, and reliable internet connection. At the moment, we have thousands of miners that are actively mining the virtual currency, in a procedure where all they’ve to do is to compete in solving a complex mathematical puzzle within 10 minutes.
The fastest miner that is able to solve this puzzle, successfully, receives a reward of 12.5 Bitcoin (valued at more than US$100,000). Miners can generate money when they sell newly created coin to buyers.
How to Buy or Sell Bitcoin
Generally, to buy or sell Bitcoin, you would need a wallet and must be registered on platforms on which the virtual currency are bought and sold. Bitcoin Exchanges is a term used to refer to these Bitcoin sales and purchase websites.
The volume of BTC you intend buying or selling will determine the kind of buyer that you’re. And the kind of buyer you’re, in turn, will determine the type of Exchange you will make use of. Some Exchanges, such as Gemini and GDAX, deal with buyers & sellers of Bitcoin in large volumes.
If you want to trade smaller volumes of Bitcoin, some trusted exchanges you can try are Coinbase, Bitstamp, Kraken, Paybis. In Africa, Bitkoin Africa is a great place you can buy or sell on.
It is pertinent to say that security and trust is a huge factor you have to consider when trying to choose Exchange platforms for trading your Bitcoin. Back in 2016, Bitcoin valued at millions of dollars got stolen when the Bitcoin Exchange platform, Bitfinex, was hacked.
So you need to be careful about the Exchange you opt for and how you make use of them. Since you wouldn’t want your coins stolen, you also have to select Bitcoin retail exchange platforms (such as Poloinex), which verify customers during trade.
Depending on the specific Exchange you go for, you can either trade your Bitcoin for cash or other cryptocurrencies.
How to Store Your Bitcoin
A Bitcoin Wallet is more or less like a virtual purse on which you store your Bitcoin. And we have various types of them as outlined below:
1. Hardware Wallet
Hardware Wallet is a physical type and is a device that is specifically designed for Bitcoin transactions. Before a transaction can be conducted, it connects to the internet, and unlike other wallets, it’s the most secure because it’s all but impossible to hack. But it may be easily stolen or damaged.
These are examples of Hardware Wallet: Trezor, Ledger Wallet, and KeepKey.
2. Online & Mobile Wallets
Online and Mobile Wallets are typically online wallets that are accessible on the Internet as well as mobile gadgets in any location you’re. Not only are they free, but are also convenient and easy to set up. However, it is less secure.
While there are many online wallet providers, safety is an issue you would have to contend with because your wallet key is saved on their database, which is prone to hacking. These are some trusted online & mobile wallets: Coinbase and Blockchain.
3. Software Wallet
Software Wallet is a wallet which is installed on your computer, just like any other software. It allots greater control as well as security over your wallet; however, you need to make sure that your computer is safeguarded against hacking and prying eyes and also stays insured against impromptu damage by backing it up. You can download the official Bitcoin Wallet on the official Bitcoin website.
4. Paper Wallet
Often employed for long-term Bitcoin storage, Paper Wallets are fundamentally a piece of paper that the private & public keys of your Bitcoin address are printed on. Some platforms offering Paper Wallets are BitcoinPaperWallet and WalletGenerator.
Is Bitcoin Ideal for Small Transactions?
This cryptocurrency was once considered to be an ideal system for small electronic payments (also known as micropayments) because with existing systems, transmitting small amounts of currency, efficiently, is difficult. Credit card fees (swipe fees) can often become higher than the purchase value, which makes this costly for retailers. But increased transaction fees of Bitcoins have proved to be an impediment that prevents it from enjoying wide acceptance in the world of micropayments.
Another challenge with this virtual currency is the volatility of its value that exceeds the volatility of other currencies as well as gold, which brings about massive fluctuations compared with the US dollar (USD). In 2013, Bitcoin value soared from $10 to over $1,000! Due to the fact that its supply is ultimately limited, prices will have to show variations so as to accommodate shifts in demand, and not the other way round. Bitcoin, unlike gold, does not have any intrinsic value from alternative uses which may anchor its price.
We have come to the end of our guide on Bitcoin. What is your opinion about this cryptocurrency? Are you a Bitcoin trader? We would like to hear from you.