Blockchain in Plain DUMMIES

WHAT IS BITCOIN?

Bitcoin is a cryptocurrency (digital money).It's just like USD, Rand, Naira and Pound but these are printed notes whereas bitcoin is digital (there are many other cryptocurrencies like Ethereum, Ripple, Litecoin etc). In other words, its web currency i.e internet money. Bitcoin is a decentralised currency i.e it's not controlled by any central bank. Instead, its value is dependant on the forces of supply and demand.

With this currency, you can transact just like we do with our notes. However, the merchant has to accept Bitcoin payments. The good thing is that an ever-increasing number of merchants are coming on board.

You can read the story of this private clinic in Botswana that is accepting Bitcoin here. Pick n Pay, one of the leading South African supermarket chains began accepting bitcoin payments in September 2017 ( read the story here). BeForward, a popular Japanese used car reseller, also accepts bitcoin as payment (see story here). An ever-increasing number of online and offline merchants are adopting bitcoin and this is pushing its reach and value up.

WHERE CAN I KEEP MY DIGITAL MONEY?

You create a wallet for your Money to stay in. The wallet is just like a mobile money wallet e.g an EcoCash wallet in ZImbabwe, M Pesa in Kenya and Glo Exchange in Nigeria.

There are a lot of websites you can create a wallet for bitcoins e.g spectrocoin, coinbase, localbitcoins, paxful and blockchain. You can create as many wallets you want since they are free.

When you create your wallet on your desired site you will be given a bitcoin address.This address is the equivalent of an ACCOUNT NUMBER and that's what you give to someone who wants to send you money.

The Address is a combination of numbers and characters e.g 17wG4ykns67nsgT85nkahtsbcjks087n

Since Bitcoin is a currency it has its own rate with other currencies that fluctuates over time. This rate fluctuates just like the exchange rate for the USD and Euro, for example.

SO DOES THAT MEAN THE MORE I TRANSACT THE MORE MY BITCOINS GROW?

No, you have to find other means which makes your bitcoins grow, just like mobile money, it can not grow the more you transact.

IS IT POSSIBLE FOR THE VALUE OF THE BITCOINS IN MY WALLET TO INCREASE?

It depends on the prevailing rate on the market if the rate rises after you buy the bitcoins you gain, and if the rate goes down after you buy the bitcoins you lose.

IF I HAVE SOME BITCOINS WHAT CAN I DO TO HAVE HARD CASH?

There are a number of ways. You can apply for a Bitcoin MasterCard on this site. The MasterCard is linked to your Bitcoin wallet. This MasterCard works just like any other. You can swipe it in shops and withdraw from ATM that accept MasterCards. You will get the USD equivalent of your Bitcoins at the prevailing rate that day.

You open an account with an exchange and then you sell your bitcoins there for your desired currency( USD, EURO, CAD etc).

The money is sent to your Mastercard (note this is not the Bitcoin Mastercard, but any other Mastercard you may have).

You can also find a local buyer (or seller) and you meet and they give you cash and you transfer Bitcoin from your wallet to theirs.

WHAT DETERMINES THE VALUE OF BITCOIN?

Bitcoin is a digital cryptocurrency, this means that it is not controlled by any central bank that affixes value to it. Instead, this currency's value is derived from supply and demand and the trust people have for it. If the last two years are anything to go by, then Bitcoin is here to stay. This is because the value of the currency has been increasing exponentially.

For example, in January 2017, one Bitcoin was worth around $1000, and as of 20 August 2017, one Bitcoin was worth just above $4000! In 2016, the currency rose by 100% from around $400 at the beginning of the year. Bitcoin was easily the best-performing currency in2016 and it's going to be the best performing in 2017 given its current price. See the chart below courtesy of