WHAT IS BITCOIN?
What is bitcoin? . Bitcoin represents individual freedom and financial sovereignty. It is the everyday person’s avenue to financial freedom. It is true money- it retains its value over time. We are again in a world where government’s monopoly on money is broken and money has again become a commodity that competes in the market place for adoption. It is trustless money-its policy, governance and security is open source and as such has no need for any centralized authority.
In simple terms, Bitcoin can be defined as the decentralized, pair to pair money that is based on the decentralized block chain technology.
How does Bitcoin work?
All we have known in our lifetime are government issued fiat currencies. So the concept of money that is not controlled by any central government or authority is very strange.
If you had to transfer some money now for example, you will need to do so through a centralized third party that sanctions and verifies the transaction. This third party institution reserves the right to allow the transaction proceed or deny it. They reserve the right to allow you access to their network in order for you to initiate and complete your transaction etc. On the Bitcoin network however, it is open to anyone to use, no one can be sanctioned or denied use of the Bitcoin network because there are no central authority that controls it.
Transactions on the Bitcoin network are facilitated by miners. Miners on the Bitcoin network are people with the necessary hardware (computers called ASIC miners) that are necessary to validate the network’s transactions . Anyone with these computers can become a miner. The miners secure the network. They do so by validating transactions on the network. Transactions are validated as true when all of the miners agree that a particular copy of transactions are true and valid and as such fit to be added to the previously existing copy of transactions on the network. The process by which miners, scattered across the world come to the agreement is called the CONSENSUS ALGORITHM of the network which in Bitcoin’s case is a proof of work consensus algorithm. For more details on how the Bitcoin network actually works click here.
Bitcoin ushers in a new era………..
Ever tried to transfer money to someone else from your bank account only to find out that your bank account has been frozen? Well, if this hasn’t happened to you before, I have had that very nasty experience. In my experience , the account had gotten dormant. Many people across the world have had this very bad experience of waking up and finding out that their bank account has been hijacked by their bank for no just reason. Some because they were suspected (or the account was suspected) as fraudulent. Others because some bad actors activities were traced to their accounts etc. fact remains that clearly innocent individuals have been denied access to much needed banking infrastructure due to no fault of theirs.
In this new era cryptocurrency has ushered us into, you and I, and anyone else who chooses to participate in the Bitcoin network becomes financially sovereign. This money network (the Bitcoin network) is non-confiscatable and non-censorable. To further understand Bitcoin and the new era and it has ushered us into we have to consider the following characteristic of Bitcoin
- It is decentralized
- It is censorship resistant
- It is open source
- It is Border-less
DECENTRALIZATION OF BITCOIN: Bitcoin has ushered us into an age of decentralized money. Money that is not controlled by any government or central bank. Money with no central point of control, failure or manipulation. In short, we are already in an era of non sovereign money. An era in which money has become a commodity that must compete in the market place for adoption. The Bitcoin network has no single point of failure. The integrity of the network is maintained by thousands of miners scattered across the world. There is no Bitcoin company, no Bitcoin CEO. It is simply an unstoppable financial force that in my opinion will swallow up and engulf our current financial system.
BITCOIN IS PERMISSION-LESS: remember the last time you wanted to open a bank account? Can you recall the amount of paper work involved and myriad of questions you were made to answer? Did you finally succeed in opening the account? If you were able to then lucky you. There are lots of people whose application to open a bank account stopped at that-an application. World-wide, there are over 2 billion people without access to any form of banking infrastructure. In the Bitcoin network, you don’t need anyone to give you permission to access the network. Anyone, with a mobile phone and with internet access can get started, access and use this global decentralized financial infrastructure.
BITCOIN IS CENSORSHIP RESISTANT: If you have been following cryptocurrency news over the past 2 months. You would have come across the Facebook/Libra story. So, Facebook had announced the launch of its cryptocurrency- the Libra. For some reasons (primarily because of fears that it might give the US dollar a run for its money) the United States congress called the CEO Mark Zuckerberg for a congressional hearing where he was drilled on his company’s plan of launching a cryptocurrency. At the end of the hearing, Facebook was directed to suspend any plans it may have of launching its cryptocurrency. In short, Facebook was censored from launching its cryptocurrency. Now contrast this to the case of Bitcoin and you will begin to understand the power of decentralization and its censorship resistance attribute. In the event that a congress of a particular country wants to hold a hearing on Bitcoin, how would they proceed? There is no Bitcoin CEO to call. There is no Bitcoin headquarters to go to or indeed to shut down. To stop cryptocurrency, you would literally need to go all over the world to shut down each and every one of the over 100,000 miners and nodes scattered across the world and you will need to shut them all down all at once which is practically impossible. If anyone of these nodes/miner is not shut down, just one of them. The whole network can be rebooted from this single miner/node that contain the original copy of all the transactions that has occurred on the network.
BITCOIN IS OPEN SOURCE: The code from which Bitcoin was developed is open source. It is online and available for everyone to see. Anyone can fork the Bitcoin code and start his/her own cryptocurrency. The open nature of the Bitcoin code is very vital. Its code shows its rate of inflation i.e the amount of Bitcoins that will be added to the network yearly. The code also specifies a cap for its supply. Bitcoin has a maximum cap of 21 million. Only 21 million of Bitcoin will be produced by 2140 when the last Bitcoin is going to be mined. The code shows how the Bitcoin mining will progress up until that time. This openness of its financial proposition makes it a most desirable asset. This is in contrast to fiat currencies and their not so open policies of money printing that devalues and debases currencies across the world. The Nigerian naira for example has lost about 150,000% of its value since its inception in 1973.
BITCOIN IS BORDER-LESS: This also derives from its decentralized nature. It is not limited by time and space. I could send Bitcoin from here in Nigeria to anyone in any part of the world provided the person has access to the internet or radio waves (Yes! Bitcoin can be transmitted and sent via radio waves)
Our story has a specie has changed!
Because of cryptocurrency, the world as we know it today has changed. A fundamental restructuring of the present order is occurring and the vast majority of the people have no idea!!! The old order is at its tail end and a new financial order has already emerged. In the old order the world’s hitherto superpower- the United States can put sanctions on a nation, say Iran and it will be effective because in the old order, the United States’ dollar is the medium of international transaction. In the new order, the United States can place as many sanctions as it may choose on Iran. There is a de-facto global medium of exchange that Iran can turn to and use making any such sanction ineffective.
In the old order, countries store their international reserve in the US dollar. In the new financial order, countries have the alternative of stacking their reserves in an electronic store of value asset.(Bulgaria is actually the first country to hold some of its foreign reserves in cryptocurrency, in fact, it holds more of its reserve in cryptocurrency than in gold).
On the individual level, imagine being in possession of the same asset that sovereign states hold. Imagine holding an asset that can’t be stopped, an asset whose supply can’t be inflated and that can’t be confiscated by anyone. The gains and return on investment to be made from an investment today is really mind blowing. The cryptocurrency space in general has produced thousands of millionaires across the world over the past decade and it is poised to do the same in the decade to come. Question is, will you be a part of that? Get some Bitcoin/cryptocurrency/decentralized block chain education, get invested and watch your investment soar!