My take on Bitcoin as an African developer

Bitcoin is changing lives every day, redefining processes in major sectors like finance, and causing individuals and institutions to rethink their earlier stance on Bitcoin. The decentralized nature of Bitcoin also adds to this mix, as it provides a system where there is no central authority that regulates the activities or participants of the system, and this allures a lot of people whose different restrictions may have made them incapable to use certain software.

But what is Bitcoin

Bitcoin means many things to a lot of people but to give an umbrella description, bitcoin can be likened to our everyday currency which we use as a medium to exchange value between different parties. But unlike our everyday currency which is physical, bitcoin is digital and used on the internet. It’s a decentralized virtual currency in the sense that it is not issued by a central authority like a government or bank, the way the dollar, pound, euro, naira, and other fiat currencies are, instead, bitcoin is created, exchanged, and overseen by networks of computers at different locations in the world (A distributed peer-to-peer network).

Bitcoin has multiple use cases for different people, depending on how they use it and how it solves their problems. The various use cases for bitcoin have brought about various definitions as to why people use bitcoin.

Why do people use Bitcoin?

This will be a somewhat biased take based on my experience and interactions I’ve had with people over time and why they use Bitcoin.

• Bitcoin as a store of value:
  People in general, use bitcoin as a store of value to save money and hold funds. For some bitcoin believers or maxi, they see bitcoin as the ultimate store of value, a way to protect them against the global money crisis, rampant inflation, and incessant printing of money by the central bank and other regulators There’s a popular term in the bitcoin world “stacking sats” which translates to saving or holding unto sats or bitcoin for a long period as a store of value.
• Sats: Meaning satoshi(s) is an atomic unit of bitcoin. One bitcoin is equivalent to 100,000,000 sats. The satoshi was named with respect to the founder of bitcoin, Satoshi Nakamoto
• Bitcoin as a means to transfer value:
  One of bitcoin’s major use cases is to send value or money across the world over the internet. It has provided an alternative payment system that operates free from external control. This relates personally to me because I see this as my own definition of bitcoin. Being a Nigerian, bitcoin has provided a means by which I can make cross-border payments to be able to use or access services that are essential to me. The banks in Nigeria have placed a restriction on the amount of United States dollars (USD) one can get from the banking sector, which has greatly affected businesses, students, and everyday citizens who would want to pay for different services, goods, or educational materials. Bitcoin has been a lifesaver in this situation, providing a system where one can pay for any of these services and products at a faster rate without any restriction.
• Bitcoin for trading:
  Investors and day traders invest in bitcoin because it’s a reliable store of value that opens up a path for diversification of investment, and while trading bitcoin on some exchanges or trying to analyze the chart, there is a potential to make a profit from bitcoin just like in the forex market. Though risky, there are individuals who solely trade on the bitcoin market using various trading platforms like Coinbase, Binance, meta trader and so many others.
• Bitcoin for business:
  Due to the versatility of Bitcoin and the security it provides, so many individuals have built businesses around Bitcoin. Mostly exchanges where people can buy and sell bitcoin, investment platforms where people invest bitcoin for prospective gains, and settlement services where businesses use bitcoin to facilitate payments and settlements for every kind of bill. The liquidity of bitcoin being able to retain most of its value after being transferred and lesser fees are attractive features to businesses.
• Bitcoin for Engineering:
  People like me who are interested in how Bitcoin works under the hood, are also attracted to the engineering aspect of it. The Bitcoin protocol is complexity made simple. A whole lot of engineering goes under the hood to facilitate the running of a secure decentralized ledger, and since Bitcoin is open source, folks who are interested in contributing to it have eagerly joined to put in their skills and improve the system. Also, labs and training schools like Chaincode labs and Qala have sprung up to support Bitcoin and facilitate easy transitioning of people into the Bitcoin space.
• Bitcoin for Mining:
  Mining is a profitable activity and people indulge in this due to its financial rewards and monetary incentives. Mining is the process that introduces new bitcoins and new transactions into the network. Miners need to solve complicated math problems to get block rewards while also getting fees for verifying and validating transactions. Individuals have ventured into the Bitcoin space to mine bitcoins and some have built businesses around this, getting rewards for mining.

Disadvantages of using Bitcoin?

Using bitcoin not only has its perks but also comes with some associated risks. I for one believe that the pros far outweigh the cons for me and that has been a major reason why I still use bitcoin today. Some of the disadvantages of using bitcoin are:

• Volatility :
  Like other cryptocurrencies, bitcoin is also volatile which reflects in the price fluctuation and affects its value. The volatile nature of bitcoin is a double-edged sword that can reduce the value of your coins or increase them, so people who invest in bitcoin are wary of the risks of its volatile nature.
• Security risks:
  In the world of bitcoin, it is generally known that he who has access to your keys has access to your coins, that’s why bitcoin users frown against using centralized systems to hold your coins, though using these systems might be trustworthy or safe for you, you never know when one might pull an FTX on you 🙂. Meaning an exchange, business or organization might decide to close up and you’ll lose access to your coins.
• Still not accepted by everyone:
  Bitcoin as a currency is still not accepted by everyone. Bitcoin is still in its infant stage as a legal tender for some societies and therefore they prefer their own fiat over bitcoin as a means of payment.
• No government regulation:
  For folks who are very familiar with centralized systems, bitcoin is decentralized and there is no government regulation, though this is a great advantage, it can be considered a disadvantage for people who want to invest in bitcoin. Investing in bitcoin doesn’t come with any government or legal protection.
• Irreversible:
  Bitcoin transactions are irreversible and final. When making a transaction with bitcoin, one must be sure not to make any mistakes or send their coins to the wrong address because transactions cannot be reversed. In centralized systems, you can petition the regulator to query a mistaken or wrong transaction, but due to the way bitcoin is structured and how it works all completed transactions are irreversible and final. A small price to pay for security and anonymity.

How can you own bitcoin?

bitcoin just as we said before is digital money used on the internet but how can you hold this? If you’re a newbie or just starting out in the bitcoin space, you’ll need a digital wallet to hold your bitcoins, most likely a bitcoin wallet. You can get bitcoins from a couple of places.

• Buying from Exchanges:
  Exchanges are very popular and most people get their bitcoins from there. There are sellers and buyers who meet to trade on bitcoins. There usually is an agreed-upon currency for exchange, which serves as a standard for equating value for both parties. Popular exchanges include Binance, Coinbase, and Bitnob among many others.
• Buying from friends, and colleagues:
  Colleagues or friends might have bitcoins and you can agree upon a standard or currency of exchange between both of you. You get bitcoins sent to your wallet while you pay the equivalent value in the currency of your choice.

Conclusion

Bitcoin is the most popular cryptocurrency and most widely used digital currency driven by its ease of usage, incentives for mining, and security. People have different reasons why they use bitcoins, and what it offers to them. It has a lot of advantages when used properly and offers some benefits traditional currency may not offer.
I hope piece this will provide an introduction to what bitcoin is, why people use it, and spur you on to learn more about bitcoin.

Tell me, why do you use Bitcoin?