What is cryptocurrency? Beginners Guide to Digital Currencies

Almost every youth now wishes to be able to afford and buy Bitcoin in Nigeria. Everyone would like to have Bitcoin and altcoins in their portfolio. However, some people still don’t know how to, where to buy bitcoin. Some don’t even know what it is or how it works. Lots of people have fallen for so many Ponzi schemes and scams because of their ignorance of the subject matter.

In this piece, we want to explain briefly to beginners in the simplest words, what cryptocurrency is, how it works, how & where to get it and how to tread carefully in the blockchain space.

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What is cryptocurrency?

Cryptocurrencies are digital currencies that are built on an innovative technology called the blockchain. Cryptocurrencies are also known as digital currencies. It is an electronic form of money that allows the transfer of value between two people without any physical cash. It involves the transfer of ownership of some electronic currency from a buyer to a seller in exchange for a good or service.

You can only transfer ownership of some electronic cash to the other party using your wallet address and the other person’s wallet address.

Let’s talk about the pioneer cryptocurrency, Bitcoin.

A brief history of Bitcoin

Bitcoin is the first successful digital currency, so exploring the history of Bitcoin will suffice for other cryptocurrencies.

There have been so many attempts to create several cryptocurrencies in the past. Although a majority of them reached some level of popularity but weren’t as successful as Bitcoin. One of which is DigiCash which was founded by David Chaum in 1980, it was briefly successful and was the first world mass adopted cryptocurrency, it was backed by proof-of-work computer algorithms as opposed to a central bank but failed at becoming the world’s first cryptocurrency.

The second is the US-based e-gold which is possibly the most notable of the pre-bitcoin cryptocurrencies with the distinction that it wasn’t decentralized and doesn’t have a fixed supply.

In August 2008, the domain name Bitcoin.org was registered remotely on anonymousspeech.com that allows anonymous websites to be registered. On the 31st of October, a person or a group with the alias Satoshi Nakamoto published a white paper that marked a new era for digital currencies. However, 2009 was the year Bitcoin was officially released.

How Bitcoin works

The key point of Bitcoin is its decentralization. To ensure decentralization Bitcoin and other cryptocurrencies use blockchain technology, which is the tech that stores all transactions. You can confirm if a transaction has been made on the blockchain so there’s no need for a third party.

In a third-party system like the use of a cheque, whenever a cheque is issued to two individuals and the money in the issuer account can only pay one of the two persons, the financial institution pays the first person that comes to claim the cheque. Blockchain on the other hand is basically a ledger containing the wallet addresses of people and the amount they have in their accounts. since it doesn’t have a third party to confirm the cheque to avoid double-spending like the instance we gave above, so how does it confirm the payment?

Well, the blockchain is a collection of several ledgers and receipts, where everyone can see each other’s balance. So just like the instance given, when a person makes the payment for something, the blockchain deducts the amount from the sender’s account and adds it to the recipient’s account.

When a person makes payments to two people, the blockchain won’t be able to identify the first person because of the time difference. To solve this issue of double-spending, there is some sort of mathematical problem given to the two-party ledger, the first to solve the problem will have the stipulated amount added to his account and deducted from the issuer account.

Another thing to note about cryptocurrency is that it has the same function and characteristics as traditional fiat. It is a store of value, a medium of exchange, scarce and limited in supply.

You can buy BTC in Nigeria and use it as a storage of value for your money, use it to make transactions or even use it as a source of investment.

Some misconceptions about Cryptocurrency

It is only used by criminals

This is the first thing that comes to the mind of some individuals, groups, and governments when they hear that crypto is decentralized. This thought can be said to be a result of pettiness and lack of understanding. There are lots of potential benefits of cryptocurrency, an important one is that it drives technology. Bitcoin and Altcoins can be used by literally anyone to accomplish lots of great objectives.

It is illegal since it is not backed by the Nigerian government

This is another misconception about cryptocurrency. The fact that the government has some reservations about Cryptocurrency doesn’t make it illegal. Many countries have adopted it as a means of exchange. El Salvador has also recently accepted BTC as a legal tender in the country. In recent news, the CBN is said to be working on launching its CBDCs before the end of 2021. This will surely increase adoption and make people more comfortable buying Bitcoin in Nigeria.

The blockchain can be hacked

Blockchain technology is one of the most secure technology on the internet. There is a difference between hacking an exchange or other platforms and hacking the blockchain. Mostly, hackers can only hack some crypto exchanges with inadequate security features but no one can ever hack the blockchain network.

Cryptocurrency requires a vast knowledge of Technology

Some people think you need to be a computer guru or perhaps need a degree in computer science before you can become a crypto enthusiast. This notion is wrong. You don’t need to know everything about cryptocurrency and blockchain before you get BTC in Nigeria. You learn as you go, you only need basic knowledge of where to buy Bitcoin, how to buy it, how to use it, and how to make money with it.

Where to buy Bitcoin in Nigeria

There are so many platforms and exchanges where you can buy Bitcoin in Nigeria. Due to the recent CBN ban, the best way to get BTC in Nigeria is using p2p exchanges You can register with the leading and most popular peer-to-peer exchange in Nigeria, Remitano.

Now that you know where to buy BTC, learn how to minimize the risks associated with bitcoin and crypto investment. The first rule is to never invest the money you can’t afford to lose. When you eventually purchase BTC, never give out your wallet password or seed phrase to anyone.  Try to avoid FOMO (Fear Of Missing Out), and FUD (Fear, Uncertainty, and Doubt). They can cloud your judgment and you might end up making the wrong decision.

On a final note, you should only purchase BTC from a reputable cryptocurrency exchange in order to avoid loss of funds. Remitano is the go-to p2p exchange to buy bitcoin in Nigeria. The exchange is user-friendly, which makes it easy for users to buy and trade BTC and other crypto assets.