Over the past few months, cryptocurrency has gone from being an obscure digital phenomenon to a mainstream rage at the moment.
So, what exactly is cryptocurrency?
Cryptocurrency is a digital platform that allows you to buy, sell, or trade in digital currencies, which are not regulated by any country’s existing money denominations.
In short, it is some form of digital token which you can use to buy items in real life. One of these cryptocurrencies is Bitcoin. Started in 2009, it is one of the best-known digital currencies out there.
How Bitcoin works
Bitcoin has been built on a distributed digital record named a blockchain. This is a linked body of data that has units called blocks. These blocks contain information about every transaction. These include information about the date and time of the transaction, total transaction value, and the buyer and seller. Also, there are unique identifying codes that are unique for each transaction, and entries are strung in chronological order.
Each block added to the blockchain then acts as a public ledger for crypto transactions, meaning that it becomes accessible to anyone wishing to view it, almost like a receipt.
How secure is bitcoin?
While making the information of each transaction public might sound risky in a blockchain, it is actually a security feature on bitcoin. Since one must be a verified bitcoin holder to access the bitcoin chain, the unique codes can recognize the user’s wallet and transactions, which means anyone making alterations will easily be caught.
How can I get Bitcoins?
Bitcoins are extracted through a process called Bitcoin mining. Bitcoin mining is the process of entering new bitcoins into circulation through a process of solving very complex computation puzzles. The puzzles will reward the user with new Bitcoins, and this is how new bitcoins are created.
While the puzzles were easier during the start of bitcoins, they have become more complex and challenging over time. This means that one now needs much more computing resources.
How do I use Bitcoins?
Bitcoins act every bit as money does in the real world, except that you can only send bitcoins digitally. Many people have invested in bitcoins as one would in bonds and stocks, buying bitcoins and holding onto them, and selling them at a higher price.
How do I Buy Bitcoins?
Most people buy bitcoins through exchanges like Coinbase, Gemini, and Kraken. These exchanges let you buy, sell and hold the cryptocurrency after setting up an account. To set up an account, you will verify your identity and provide a funding source, for example, your bank account or debit card.
Cryptocurrency is still developing, but many countries in Africa are coming around to it, with South Africa among the African countries embracing it.