Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

 

Bitcoin: The Digital Currency Revolution

Nigeria is experiencing a digital cash revolution in Bitcoin buying, selling, trading, acquisition and asset-holding – as the cryptocurrency creeps into the country. Bitcoin transactions show a spike in cryptocurrency adoption. According to bitcoin.com Nigeria witnessed a recent spike in bitcoin adoption, with the P2P markets setting a new record for trading volume . . .

HISTORY OF BITCOIN

Bitcoin is a new currency created and introduced in 2008 by an unknown person. The bitcoin software was eventually released to the world in 2009 by the same unknown person using the alias Satoshi Nakamoto. Bitcoin is a  cryptocurrency, a digital currency or (digital asset) designed to work as a medium of exchange.

This digital currency uses cryptography to control its creation and management, rather than relying on central authorities like the US Federal Reserve, Nigeria’s Central Bank of Nigeria (CBN), UK Bank of England or indeed any central banking or financial institution.

Photo above: A man who some claimed was the Bitcoin founder Satoshi Nakamoto leaving his home in Temple City, Calif., in 2014 | Credit David Mcnew/Reuters.

Bitcoin was introduced in 2008 by an unknown creator going by the name of Satoshi Nakamoto, who communicated only by email and social messaging. While several people have been identified as likely candidates to be Satoshi, as the creator is known in the world of Bitcoin, no one has been confirmed as the real Satoshi, and the search has gone on.

Satoshi created the original rules of the Bitcoin network and then released the software to the world in 2009. Satoshi largely disappeared from view two years later. Anyone can download and use the software, and Satoshi now has no more control over the network than anyone else using the software.

The presumed pseudonymous Satoshi Nakamoto integrated many existing ideas from the cypherpunk community when creating bitcoin.Transactions are made with no middle men – meaning, no banks! The hype about Bitcoin is that you can get rich by trading on it. The price of bitcoin skyrocketed into the thousands in 2017.

Bitcoin is a digital and global money system (currency). It allows people to send or receive money across the internet, even to someone they don’t know or don’t trust. Money can be exchanged without being linked to a real identity. The mathematical field of cryptography is the basis for Bitcoin’s security.

Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value. The unit of account of the bitcoin system is bitcoin.

 

PRE-HISTORY OF BITCOIN

Prior to the release of bitcoin there were a number of digital cash technologies starting with the issuer based ecash protocols of David Chaum and Stefan Brands. hashcash of Adam Back. The first proposals for distributed digital scarcity based cryptocurrencies were Wei Dai’s b-money and Nick Szabo’s bit gold.

CREATION OF BITCOINS

The word bitcoin was defined in the white paper that was published on October 31, 2008. It is a compound of the words bit and coin. On August 18, 2008, the domain name bitcoin.org was registered. On October 31, 2008, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptography mailing list. Initially, what was described as “a system for electronic transactions without relying on trust” came to be. In January 2009, the bitcoin network came into existence with the release of the first open source bitcoin client and the issuance of the first bitcoins with Satoshi Nakamoto mining the first block of bitcoins known as the genesis block, which had a reward of 50 bitcoins. Based on bitcoin’s open source code during 2011-2017, other cryptocurrencies started to emerge.

Bitcoin is a digital currency or cryptocurrency with a worldwide payment system involving or relating to the use of computer technology. The digital revolution quickened the creation of the Bitcoin cryptocurrency. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly through the use of cryptography (i.e. the art of writing or solving codes.), without an intermediary.

These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto[10] and released as open-source software in 2009.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Bitcoin merchants now use a cryptocurrency wallet.

Photo: Bitcoin transactions are tracked by a decentralized network of computers around the world | Credit Mark Blinch/Reuters.

ANONYMITY

A major difference between using bitcoin and using regular money online is that bitcoin can be used without having to link to any real-world identity of persons. Unless someone chooses to link their name to a bitcoin address, it is hard to tell who owns the address. Bitcoin does not keep track of users; it keeps track of addresses where the money is.

Photo: An actual bitcoin transaction from a web based cryptocurrency exchange to a hardware wallet | Wikipedia photo.

NIGERIA EXPERIENCES SPIKE IN BITCOIN ADOPTION

Nigeria comprises the most recent African nation to experience a spike in cryptocurrency adoption, with Zimbabwe’s bitcoin prices having been among the highest worldwide for a large portion of 2017. According to bitcoin.com Nigeria witnessed a recent spike in bitcoin adoption, with the P2P markets setting a new record for trading volume thus far during the week of the 16th of December.

NairaEx, https://www.nairaex.com is Nigeria’s premier Bitcoin exchange with the slogan “Trading Bitcoin has never been so easy!” The site has instructions on how to buy or sell Bitcoins In Nigeria. Nigeria is reported to have experienced the second largest growth in its P2P bitcoin markets, trailing behind only China after witnessing growth of approximately 1,500% during 2017.

October saw the launch of two new Nigerian Bitcoin exchanges: Bitkoin Africa, cofounded by Timi Ajiboye; and Tanjalo, which was cofounded by Tim Akinbo. The exchanges have established significant market shares, with Mr. Ajiboye claiming that almost half of Bitkoin Africa’s trading volume since launch took place during the first ten days of December, and Mr. Akinbo estimating that Tanjalo has facilitated close to $1 million USD worth of cryptocurrency since launch despite the company investing in “very little marketing.”

HOW DOES BITCOIN WORK?

Many prospective investors and online traders find the concept of Bitcoin confusing. The virtual currency has been a constant source of controversy and is still not well understood. Currently, the average price of one Bitcoin is about $15,853, according to Blockchain.info, a news and data site.

A Bitcoin is a digital token — with no physical backing — that can be sent electronically from one user to another, anywhere in the world. A Bitcoin can be divided out to eight decimal places, so you can send someone 0.00000001 Bitcoins. This smallest fraction of a Bitcoin — the penny of the Bitcoin world — is referred to as a Satoshi, after the anonymous creator of Bitcoin.

This all gets confusing, because Bitcoin is also the name of the payment network on which the Bitcoin digital tokens are stored and moved.

Unlike traditional payment networks like Visa, the Bitcoin network is not run by a single company or person. The system is run by a decentralized network of computers around the world that keep track of all Bitcoin transactions, similar to the way Wikipedia is maintained by a decentralized network of writers and editors.

There are companies in most countries that will sell Bitcoins in exchange for the local currency. Usually, a company will link to your bank account or credit card and then sell you the coins for your local currency. Opening an account with such online Bitcoin trading companies is similar to opening a traditional bank or stock brokerage account, with lots of identity verification to satisfy the authorities.

For people who do not want to reveal their identities, such online Bitcoin companies offer services which will connect people who want to meet in person to buy and sell Bitcoins for cash, generally without any verification of identity required.

The price of Bitcoin fluctuates constantly and is determined by open-market bidding on Bitcoin exchanges, similar to the way that stock and gold prices are determined by bidding on exchanges.

THE BASICS FOR A NEW USER

As a new user, you can get started with Bitcoin without understanding the technical details. Once you have installed a Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address and you can create more whenever you need one. You can disclose your addresses to your friends so that they can pay you or vice versa. In fact, this is pretty similar to how email works, except that Bitcoin addresses should only be used once.

WHAT IS BITCOIN MINING?

Bitcoin mining refers to the process through which new Bitcoins are created and given to computers helping to maintain the network. The computers involved in Bitcoin mining are in a sort of computational race to process new transactions coming onto the network. The winner — generally the person with the fastest computers — gets a chunk of new Bitcoins, 12.5 of them right now. (The reward is halved every four years.)

People compete to “mine” bitcoins using computers to solve complex math puzzles. This is how bitcoins are created. Currently, a winner is rewarded with 12.5 bitcoins roughly every 10 minutes. There is generally a new winner about every 10 minutes, and there will be until there are 21 million Bitcoins in the world. At that point, no new Bitcoins will be created. This cap is expected to be reached in 2140. So far, about 16 million Bitcoin have been distributed.

Every Bitcoin in existence was created through this method and initially given to a computer helping to maintain the records. Anyone can set his or her computer to mine Bitcoin, but these days only people with specialized hardware manage to win the race.

Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain. It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the network.

These rules prevent previous blocks from being modified because doing so would invalidate all following blocks. Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the block chain. This way, no individuals can control what is included in the block chain or replace parts of the block chain to roll back their own spends.

OWNING BITCOINS

Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Unlike bank accounts, bitcoin wallets are not insured by the US FDIC, Nigeria’s NDIC or indeed any central insuring institution in the world.

FUTURE OF BITCOIN REGULATION?

No one knows what will become of bitcoin, the digital currency. It is mostly unregulated, but some countries like Japan, China and Australia have begun weighing regulations. Governments are concerned about taxation and their lack of control over this Digital Currency.

Digital: (of signals or data) expressed as series of the digits 0 and 1. Involving or relating to the use of computer technology.

Currency: A system of money in general use in a particular country, like the US Dollar, Nigeria’s Naira or the British Pound Sterling.

In the final analysis, Bitcoin or bitcoin is a digital currency in which transactions can be performed without the need for a central bank: I don’t know if bitcoin is destined to succeed as the global currency. Will Bitcoin become the next generation world currency? Who knows . . .

• a unit of bitcoin: bitcoins can be used for online transactions between individuals.

© 2017 Nnamdi Ebo | Bitcoin