For those still wondering, “What the heck is bitcoin?” Bitcoin is the first ever decentralized currency. This simply means that the system does not work with a central bank or a single administrator. It is a peer –to-peer network transaction that takes place between users directly through the use of cryptography. The transactions are monitored and verified by network nodes and also recorded in an immutable ledger called blockchain which is seen by everybody to ensure transparency.
The Central Bank of Nigeria (CBN) in January 2017, advised Nigerians to desist the use of these virtual crypto currencies such as Bitcoin, Litecoin and Ripples. They further added that anyone who does is doing that at his/her own risk since it is not a legal tender in the country.
Since banks are not involved, how does bitcoin work?
When Person A transfers bitcoin to person B, the information is entered in a public ledger known as blockchain as I mentioned earlier. The ledger records all the transactions that have taken place since the last transaction and they are all verified by a massive amount of computing power.
Bitcoin balances or account are kept using public and private keys. These keys are long strings of random letters and numbers linked through a mathematical algorithm that was used to create them. The public key (which you can refer to as an account number) is the address that is visible to others and which can be used to make bitcoin transactions to you. The private key (comparable to your ATM pin or mobile transfer PIN) which should be a well guarded secret and which will be used by you to authorized bitcoin transmission.
How do I get started with bitcoin
Get yourself informed about bitcoin; this post has done that for you to a reasonable extent. You don’t need to be a guru in crypto currencies before you get started. If you are still curious about bitcoin, you can visit the bitcoin website for more information.
Choose a wallet; there are different types of wallets available on mobile, web, desktop and hardware. Check your options and select the one that best suits you.
Put some coin into your wallet, there are so many ways of doing this such as receiving bitcoin from a friend or accepting payment in bitcoin. The most secure way is buying through an exchange. However you have to obtain the real world identities of the operators before proceeding with any payment to avoid being conned by dubious individual.
Start using bitcoin. Now you’re good to go. I wouldn’t recommend bitcoin to you as an investment unless you have enough time to manage it like the stock market. You can get rich there but at the same time, there is no guarantee you will ever make profit from it.
What are the pros and cons of bitcoin?
>> The money supply does not inflate because it is fixed. The highest amount of bitcoin that can go into circulation is 21million bitcoins.
>> It charges lower transaction fees than normal banks
>> You are in control of your money, nobody can charge you extra without getting noticed
>> Information is transparent. All finalized transaction is available for everyone to see.
>> It is hard to cheat anyone because everybody has a copy of all the transactions that has ever taken place. Any alteration will throw the system into an imbalance and you will be fished out.
>> It is still experimental and in active development. It will take some time before it reaches its full potential.
>> The price of bitcoin is volatile. It can increase or decrease in a short period of time due to its young economy and sometimes illiquid markets.
>> It is not anonymous. Some effort is required to protect your privacy with bitcoin. All transactions are stored permanently in the network.
>>It has zero intrinsic value. It is valuable because people are willing to recognize it as a currency.
>> Unconfirmed transactions aren’t secure.
Precautions to take note of before proceeding to invest your hard earned-money on bitcoin digital money are as follows:
>> At first, start with a small amount of money as a beginner until you get to understand fully well the major things involved in investing on Bitcoin crypto currency.
>> Ensure to find ways to invest any of your Bitcoin currency in better securities such as loans and IPOs.
>> Get some bitcoin traded for Altcoins
Profitably, Bitcoin investment is likely to give you good return after exchange or conversion from it digital currency to any other currency. It may be from the digital to physical cash like dollars, Euro, Naira, Yen etc. But on the other hand, there is high probability that you might loose some of your investment during the process.
To sum up; an investment in bitcoin is likely to get you good returns. On the other hand, the probability that you will lose some or all of your investment is high. So don’t invest money that you cannot afford to lose.
So now the task is up-to you whether to venture into the bitcoin business or not. Make a wise decision.
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