you live under a rock or on a remote island with no social media you must have
heard the word Bitcoin. In the last couple of years, there have been tonnes of
good and bad press on bit??ins.
what exactly are bitcoins? Are they the glorious future of online currency or
just a passing fad that will collapse faster than you can say Cryptocurrency?
What Are Bitcoins?
bit??in is a cr??t?curr?n?? or digital asset that came into circulation in
2009. It is ?ut?n?m?u? of tr?diti?n?l banking and uses cryptography to secure, verify
and r???rd the d?t?il? of ???h tr?n???ti?n made.
are monitored by a peer-to-peer Internet protocol and are 100% free of
to date, remains the best-known virtual currency. It requires specialized
encryption techniques to create and transact. Hence the name cryptocurrency. All
transactions are added to a ledger in the public domain called a blockchain.
process of users and num?r?u? bu?in????? running a program to solve m?th?m?ti??l
problems in ?x?h?ng? f?r th? virtu?l ?urr?n?? is called mining.
of 3rd November 2014, 13.36 million bitcoins, 64% of the total
supply had been mined. By 13th January 2018, a whooping 16.8 million
bitcoins (BTC), which represent 80 percent of the entire bitcoin supply, were
Bitcoin Vs. Traditional Currency
has a 21million supply cap built into its protocol by creator Satoshi Nakamoto.
This was designed to create scarcity of the digital asset. The more bitcoins mined,
the higher the scarcity and in turn demand and value.
that the l??t Bit??in will be mined by 2050. After this, it will become even
harder to obtain them, which potentially makes every coin even more valuable.
has been the bane of existence for tr?diti?n?l ?urr?n?i??, as every year they
tend to lose their purchasing power. This
is highly unlikely in the case of bitcoins.
are touted as having a lower risk of ??ll???? when compared to conventional
?urr?n?ies dependent on central regulatory units.
they are not entirely risk free as observed on December 22, 2017 when the Bitcoin dipped as low
as $12,855 from highs of over $20,000 on
some exchanges. A 30% percent tumble
that shook the cryptocurrency markets.
has also proven to be a tough month for the currency with value dipping up to
$10,000 at its worst. This is largely attributed to the Chinese New year where
people exchange their cryptocurrencies for fiat currency to enable them to
purchase gifts and vacations for the holidays.
Bitcoin Value Adds over
Return on Investment
For early adopters, bitcoin is a high-risk, high-return
are extremely mobile. All you need is a virtual wallet and a smart phone or
memory stick in your pocket. Try carrying around a billion dollars like that.
initially promised to deliver fast peer-to-peer transactions at a fraction of
standard fees. But with its growing
popularity and dive into the mainstream, the cryptocurrency is grappling with
slow transfers. However, it is a lot faster than most traditional payment
Zero/ Low F???
bank transfers and ?r?dit ??rd payments, there are usually no transaction fees
for bitcoin currency exchanges because miners are compensated by the network.
The risk of fraud and identity
theft when making online or credit card payments is very high. Merchants have
full access to your credit line and a whole lot of personal information.
Bitcoins uses a “push” mechanism, which allows the user to send exactly what
they want to the merchant or recipient with no further information. Hello
anonymous irreversible transactions!
All you need is access to the Internet and a
smart phone and you are well on your way to cryptocurrency nirvana. There are
3.9 billion individuals with access to the Internet or mobile phones. With
education and awareness all these are primed for the bitcoin and digital
currency market. These numbers are growing by the minute.
Bitcoin is managed entirely by its network,
and not any one central authority. The network operates on a user-to-user (or
peer-to-peer) basis. This decentralization pits crypto over fiat currency any
Bitcoins are not regulated by exchange
rates, interest rates, transactions charges or other charges of any country
making them a borderless and universal currency.
Most electronic cash systems like PayPal or
Kenya’s Mpesa are in one way or the owned or regulated by someone else. This
“owner” has the power to make decisions about your money without consulting
With bitcoins, you are the sole custodian of the
private key and the corresponding public key that makes up your cryptocurrency
address. No one can steal that away from you.
A Bitcoin Billionaire
Bitcoin is a great option for making some
extra cash or diversifying your wealth portfolio.
Top investors like Mark Cuban and Jim Cramer
advise that one should only invest in bitcoin if you’re prepared to lose your
money. However, for a lot of the early adopters, they are laughing all the way
to the bank. The value of the bitcoin has skyrocket and keeps growing since day
As with all investments, rigorous research,
an appetite for risk and a healthy dose of optimism is required.
Some other indirect ways include
Bitcoin miners create the public ledger,
which allows the whole system to run like clockwork. For every new block
created, the miners are paid in bitcoin, which grows the community. A bitcoin
mining calculator is a nifty tool for checking the profitability of mining
A bitcoin faucet is a website that allows one
to give away minimal amounts of Bitcoins to users. The faucet owner makes money
by billing for ads placed on the site.
Future of Bitcoin
of the challenges that bitcoin faces is that one’s digital fortune could be gone
in a poof of a computer crash or that a hacker may penetrate your secure virtual
vault. Advances in tech will help resolve this.
The anonymity of
cryptocurrency transactions has created a whole world order of money
laundering, drug peddling, smuggling and weapons procurement.
This will ultimately result
in more scrutiny from governments and regulatory agencies, which could crumble
the very premise on which these currencies were created.
Finally, there is a substantial
number of merchants who accept bitcoin payments, they are still in the
minority. For bitcoins to become more commonplace, they have to first gain
widespread acceptance among consumers.
Their relative complexity in
comparison to conventional currencies is a deterrent for most except the very
Overall, Bitcoin has a long way to go before it
can take the place of credit cards, dollars and euros as a tool for global
commerce, but its future sure shines bright