Bitcoin frequently asked questions – The growing interest in bitcoin among Nigerians has apparently not gone unnoticed, while some are trading others are holding hoping to see a significant appreciation in the near future.
Significantly, Nigerians have finally outgrown the bounds of impending fear factor that somewhat holds them down alongside negative media publicity cryptocurrency had early on.
In the light of these, it becomes so imperative to hold the newbies by their hands as they journey into the industry by providing a lantern to further guide them into a better understanding and appreciation of bitcoin.
In this guide, you will get to understand the A, B and Cs of Bitcoin to further enhance your industry participation in the most unique way.
Thus introducing “Frequently asked questions on Bitcoin”
Like I said early, this guide will dismantle your puzzle and put you at the driving seat of discovery, learning and unlearning all for yourself.
So relax, it promises to make not just a good read, but such educative and well thought out experience. Happy reading…..
What is Bitcoin?
There have been varying but yet similar definition of the term “Bitcoin” they however arrive at a definite point, suggesting same idea, purpose and perception.
On this premise, we’ll define bitcoin from a more unified perspective such as to aid learning intensively.
“Bitcoin can be defined as a digital currency, supposedly created in the year 2009, which facilitates instant payment through a peer-to-peer technological base.”
“It is likewise a form of electronic money to say, a decentralized digital currency, which does not depend on any bank, yet can be sent from one person to another via a peer-to-peer technology, does not require and intermediary to consummate whatsoever.”
From the above definitions, it can be deduced that bitcoin rather represented by the connotation “BTC.”
- Operates as a digital currency, which suggests its nowhere a paper or fiat currency
- No central bank controls it, this means it cannot be freeze, subjected to any form of rate whatsoever, BTC determines its routes.
- Bitcoin transfer cannot likewise be restricted or controlled by any authority, it’s such an independent currency.
Frequently asked questions: “Who created Bitcoin?”
The history of bitcoin creation could be traced back to 2008 when a fellow known as Satoshi Nakamoto developed an academic white paper.
The paper in essence puts in cognizance on a perceived system which should be a peer-to-peer electronic cash mechanism, projected to be affordable, secure with maximum efficiency surpassing the conventional banking routine of our time.
Elementarily, the paper meant to solve an existing problem, which is rigid daily financial system that has successfully enshrined financial prosperity in the hands of very few rich class.
On a flip side, Satoshi Nakamoto envisaged an electronic cash medium where funds could be easily assed and transferred among peers, this necessitated the creation and the adventure into the birth of “BTC.”
Which today is an electronic cash, operating optimally at a frequency higher than the conventional fiat currency, not even controlled by any bank or government of this world.
However, the first bitcoin transaction occurred in 2009.
How bitcoin works
There is no straight line rule that you must understand the aggregation and formation of bitcoin before you can have access to it.
All you need to kick start your journey with bitcoin is just a bitcoin wallet, get one on your phone and you’re good to run down the trend.
The bitcoin address serves like your regular account number through which you could send or receive funds from friends and family.
As a digital currency, you may not see or touch bitcoin like other fiat currency.
How to invest in Bitcoin
You could actually invest in bitcoin by first and fore mostly signing up for a bitcoin wallet, this is a medium/platform through which transactions on bitcoin could be consummated.
Investment in bitcoin comes in a number of ways;
- You may buy bitcoin to resale
- Buy bitcoin to keep for some time, then resale when it appreciates
- You may just buy bitcoin to send or make payment for goods and services across the globe.
Interestingly, some outlets now accept bitcoin payment for goods and services, whichever applies to you.
Principally, to invest in bitcoin, kindly follow the below steps;
- Sign up for a bitcoin wallet
- Kindly link your bank account, this will help to make purchases from the exchange. Ideally, your wallet should be connected to your preferred bank account for funding options.
- Locate a bitcoin exchange
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- At this point, you should be able to place your order with the exchange, complete your payment and have your wallet credited with value expressly.
You are up and running, kindly note that the smallest unit of bitcoin is called Satoshi, you may not afford one bitcoin since it costs several thousands of USD.
Having made purchases, it’s up to you to decide if to keep and store your bitcoin at long or shut run, keeping at long run may benefit you, since the price is always on the North-Pole.
Frequently asked questions: How is bitcoin price determined?
The price is determined by market forces of demand and supply, the higher the demand for bitcoin the higher the price goes, while the lesser/lower the demand for bitcoin, the lower the price per Satoshi.
It then implies that if you hold certain satoshi, and the demand for it sky rockets, the more value you tend to retain, you however lose when it’s vise-versa.
What is block chain all about?
This is a share public ledger which houses or controls the whole bitcoin network. If transaction is confirmed, it will be included in the block chain.
Additionally, block chain allows bitcoin wallets to calculate balance, this creates an avenue for new transactions to be verified, which authenticates its genuine and actually owned by the spender.
This as well verifies the integrity and chronological order of the block chain.
Frequently asked questions: Is bitcoin safe?
It may sound funny to say that bitcoin cannot be hacked, it’s possible, but that may take 1000 years ahead. You have the responsibility to keep your coin safe in every aspect.
Do not make your coin vulnerable by revealing your log on to a third party.
Are people really into bitcoin?
The number of people and businesses using bitcoin in recent time is heading to the roof top.
The name bitcoin is gradually becoming a household name.
Here in Nigeria, a number of businesses are accepting bitcoin as a means of payment for goods and services from their customers.
A survey as at May 2018 shows that the value of bitcoin in existence exceeded 100 billion USD, with reference to millions of bitcoins being exchanged daily.
If I lose my bitcoin what happens?
As a user, you may lose your wallet, when that happens, the resultant effect is that money will go out of circulation.
Unfortunately such bitcoin becomes dormant forever since no one can find or access the private keys.
What is the legality of bitcoin?
To the best of my knowledge, bitcoin has not been declared illegal by any institution.
Ironically, countries and central banks who spoke ill of bitcoin in distant years are now bitcoin ambassadors.
Virtually every nation of the world has bitcoin as an aggregate part of its economic existence.
Bitcoin is a decentralized digital currency like any other cryptocurrency, that said, various central banks of the world are beginning to look into integrating the new technology with the existing regulated financial system.
Bitcoin to me seems like a Ponzi scheme
No, Ponzi scheme is not a good investment and does not in any way relate to bitcoin or cryptocurrency.
A Ponzi scheme is an investment operation which is strictly fraudulent in disguise, in return pays return to investors from their money.
The iconic point is that a Ponzi scheme is designed to collapse at the expense or detriment of the last contributors, this usually happens when there are no more new contributors into the scheme.
Bitcoin is strictly a digital currency, not even a fiat kind of currency, bitcoin is highly decentralized in the sense that it cannot be used to induce anyone.
It’s a free software project without a central authority overseeing its affairs.
Are there fees charged on bitcoin?
You are at liberty to process transactions without fee, normally only cost a tiny fortune. Most wallets give you the interface to review any fee before sending your bitcoin.
Frequently asked questions: What is bitcoin mining?
When you hear mining the first thing that comes to your mind is the traditional mining right? Bitcoin mining has a slight variation in the sense that there’s no physical labor involved whatsoever.
Now, bitcoin mining is the process of putting computer to work, aimed at processing transactions.
The network is secured in the process while everyone in the system is synchronized together.
You may refer to it as bitcoin data center, just that it’s decentralized with different miners operating from the comfort of different countries, additionally, the network is not in control of anyone.
This process of mining leads to emergence and issuance of new bitcoin.
Still don’t understand the difference between bitcoin and fiat currency
Bitcoin is a currency that does not reside in a confine border, not censored and decentralized, bitcoin like any other cryptocurrency is not controlled by any government or central bank of this world.
While fiat currency in the other hand is a traditional currency issued and controlled by a particular government, which spending powers are confined within a geographical location being controlled.
Additionally, fiat currency can be printed, touched and carried around unlike bitcoin which only exists digitally/electronically.
The Nigerian naira is an example of fiat currency, Ghana Cedis is an example of fiat currency too.
These are few of the frequently asked questions on Bitcoin, you can actually start buying Bitcoin the moment you secure a wallet.
Have further concerns on Bitcoin? Let’s get talking at the comment section.