BITCOIN: 21ST CENTURY BUSINESS CURRENCY OR JUST A HOAX ?
written by nkemjika okeke
Often times ,over the last four to five years , we have seen various Ponzi schemes stem across africa offering its potential clients ,a ‘double-your-money ‘ avenue . we have also watched on as some of those Ponzi schemes like these, have crashed due to their inability to recycle effectively money deposited and withdrawn between its members with the well publicized cases of MMM crash in Zimbabwe, Zambia and Nigeria . Multi level Marketing schemes like GNLD among others have been able to penetrate the Nigerian consumer market , engaging youths and old alike in retail marketing of products for bonuses with many failing to reach attained heights of wealth as promised by these firms during their advertising due to the fact that it is more difficult than how its usually said .
Up steps BITCOIN , and although lots of Nigerians are still yet to know about it , many have taken it for another MMM or a money grabbing scheme meant to rip off people…However, is that what it really is ? lets find out .
Bitcoin, according to Coindesk.com, is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros — they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems. It’s the first example of a growing category of money known as cryptocurrency. Cryptocurrency is computer generated currencies and therefore this means that the bitcoin is a currency generated by a computer to transact business. We should not forget too that a currency is any form of money in circulation and is a legal tender for the exchange of goods. If Bitcoin can be called a currency, then it must be LEGALLY ACCEPTED AS A MEDIUM OF EXCHANGE . A software developer called Satoshi Nakamoto proposed bitcoin, which was an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees. Bitcoin can be used to buy things electronically. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally.However, bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.
Apparently, this is a totally different scenario and although Bitcoins are new , people are finding it difficult to utilize it . there are a lot of reasons for people to adopt the use of this currency and some of the reasons are:
· Bitcoin transactions are fast
· Payment on Bitcoin transactions are minimal
· The currency is not produced by any central bank and is floated on its own
· It is not inflationary
· It is private
· It is useful for online transactions
At this point, we ask . How does it work ?
HOW DOES BITCOIN BUYING AND SELLING WORK ?
Bitcoin transactions are sent from and to electronic bitcoin wallets, and are digitally signed for security. Everyone on the network knows about a transaction, and the history of a transaction can be traced back to the point where the bitcoins were produced.
Holding onto bitcoins is great if you’re a speculator waiting for the price to go up, but the whole point of this currency is to spend it, right? So, when spending bitcoins, how do transactions work?
Here’s the funny thing about bitcoins: they don’t exist anywhere, even on a hard drive. We talk about someone having bitcoins, but when you look at a particular bitcoin address, there are no digital bitcoins held in it, in the same way that you might hold pounds or dollars in a bank account. You cannot point to a physical object, or even a digital file, and say “this is a bitcoin”.
Instead, there are only records of transactions between different addresses, with balances that increase and decrease. Every transaction that ever took place is stored in a vast public ledger called the block chain. If you want to work out the balance of any bitcoin address, the information isn’t held at that address; you must reconstruct it by looking at the blockchain.
What does a transaction look like?
If Ebuka sends some bitcoins to Tayo, that transaction will have three pieces of information:
· An input. This is a record of which bitcoin address was used to send the bitcoins to tayo in the first place (he received them from his friend, saliu).
· An amount. This is the amount of bitcoins that Ebuka is sending to Tayo.
· An output. This is Tayo’s bitcoin address.
People are sending bitcoins to each other over the bitcoin network all the time, but unless someone keeps a record of all these transactions, no-one would be able to keep track of who had paid what. The bitcoin network deals with this by collecting all of the transactions made during a set period into a list, called a block. It’s the miners’ job to confirm those transactions, and write them into a general ledger.
We can see the process taking up by bitcoins . now we ask ..how legal is the use of bitcoin in transactions? Bitcoin is legal in many countries and are only regulated by financial crime agencies who check mate their actitvities.
Actually , we seem to be forgetting something ….what can these bitcoins buy for us ? Bitcoins have been added as part of means of payments by various companies like Microsoft, dell aand even travel agencies . it seems a fortune in bitcoin is really worth it after all !!
It is clear that the use of Bitcoins in foreign trade is proving to be an economic colossus, reducing the effect of physical currency circulation and its attendant implication on inflation of prices among other inconvinences. It seems that the Bitcoin , as a currency , is gradually replacing (like technological advances) and effectively correcting the attendant failures of the use of the physical cash
It might take longer for the use of bitcoin to be a norm in Nigeria , but increased use will certainly aid to boost the countrys failing economy .