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Some bitcoin Q&A
#1
I was answering some questions for someone doing a magazine article, so thought this might fit here too:

Questions:
  • What is Bitcoin?
  • How does Bitcoin work?
  • How can one get “in on the action” with Bitcoin? Where to start and how to be successful?
  • How does South African policy around cryptocurrencies differ from the rest of the world? And what is the impact on investors?
  • Why should people choose Bitcoin rather than some of the other cryptocurrencies that are around?
  • What are your comments for the sceptics? Forbes Magazine recently published an article suggesting Bitcoin is “about to self destruct”. Do you disagree and why?
  • Where is Bitcoin going? What lies ahead here in South Africa and around the world?
  • What else do South Africans need to know about Bitcoin?
Answers:
  • What is Bitcoin?
Bitcoin is the worlds first decentralized digital currency. It was invented in 2008 and released to the world in 2009 as open source software, to be a system of peer-to-peer electronic cash by its anonymous creator known only as Satoshi Nakamoto.
Because it is peer to peer (person to person), you can send and receive value as bitcoin pretty much instantaneously with another person. There is no company in the middle like a bank, Western Union, Moneygram or PayPal, that puts a delay on your funds for 24-48hours, or can stop a payment, freeze your account, blacklist you, reverse a transaction etc.
Bitcoin is open source software, so there is no single person or company in charge, no servers or website that can be hacked or shut down. There are no offices or branches you can visit for bitcoin, the system is entirely online. The system is decentralised and so there is no central point of failure and extremely robust. Since it was released to the public as open source software, the inventor no longer has any power or control of the system either, changes are made by consensus, so  it is extremely hard to make changes or manipulate as the community needs to agree for a change to take place.
Bitcoin is finite, and there will only ever be 21million of them. The supply is limited and the rate of creation of new bitcoin is set at 12.5 bitcoins created roughly every 10 minutes. Every four years the rate bitcoins are created is cut in half, so after the next 'halving' the rate will be 6.25 bitcoins made every 10min. This makes bitcoin a deflationary currency, and it becomes rarer and rarer over time. As time goes on there is less available, and combined with the influx of new users and uses for bitcoin, the demand increases. As supply has decreased, and demand has increased, the value has increased dramatically. This is the opposite to regular currency, where there is inflation of the money supply, making your Rand less valuable every year, and your purchasing power less and less over time.
  • How does Bitcoin work?
We can send pictures and messages instantly on the web, so why not money....a bitcoin transaction is data being sent, just like a message or a picture upload. Sending bitcoin to someone as a payment is similar to sending an email...you send from your wallet direct to the recipients wallet, just like you would send an email from your address to the recipients email address.
Anyone can have a bitcoin wallet regardless of their age, or where they live in the world, there is no criteria you need to provide such as proof of residence or funds, it is completely borderless. Anyone can transact at anytime with anyone else without any person or company being able to stop or interfere with their transaction.
The cost to send a bitcoin transaction is minimal and extremely cheap compared to regular methods of sending money. Since the transaction is data, the cost per transaction is based on the amount of data sent, not the amount of value being sent. If you send 10 million Rand worth of bitcoin to someone, or 1000 Rand worth of bitcoin, the cost will be similar and around a few Rand to send. So if you send a small transaction, the fees could look like a lot percentage wise, but on a large transaction, it can be a very small percentage.
  • How can one get “in on the action” with Bitcoin? Where to start and how to be successful?
To use bitcoin you need a digital wallet to store them in, which can easily be installed on your computer or mobile phone, or you can use a web based or physical hardware wallet.
If you want to use bitcoin you first need to actually own some bitcoin. You can be given bitcoin by friends or family, or you can purchase bitcoin from someone who has some and is willing to sell some to you. The safest place to get bitcoin is on a bitcoin exchange, as they make sure that nobody gets cheated and make sure that if you deposit money, you get your bitcoin. Using an exchange to buy bitcoin is safe and fast, and normally the best prices for bitcoin, although the exchanges themselves will have their own rules about who can open an account, and how much you can transact etc. We list a variety of methods to get bitcoin on our website here: https://www.bitcoinzar.co.za/buy-bitcoin...th-africa/
Using an exchange, the process is that you deposit Rand, exchange it for bitcoin, and withdraw your bitcoin to your wallet. If you have bitcoin and want Rand, you reverse this procedure, deposit your bitcoin on the bitcoin exchange website, exchange it for Rand, and withdraw Rand to your bank account.
Being successful with bitcoin is like being successful with any currency. Dont 'invest' in get rich quick schemes and anything that seems too good to be true. If you are investing in some bitcoin, treat it as an investment and be rational. A good way to invest is to set aside an amount of money you want to invest on a monthly basis, and buy bitcoin on a set date (eg end of the month) regardless of the price. Some days you may get it cheaper, sometimes it will be more expensive, but you will be spreading the risk over time and get an average price for your bitcoin. It would be reckless to invest your life savings into bitcoin as it is considered a high risk investment.
  • How does South African policy around cryptocurrencies differ from the rest of the world? And what is the impact on investors?
Cryptocurrencies are unregulated in South Africa and you are using them at your own risk.
  • Why should people choose Bitcoin rather than some of the other cryptocurrencies that are around?
Bitcoin is THE original blockchain and the first real cryptocurrency.
It has been used successfully and continuously since 2009 and is the most tested and mature blockchain in existence with years head start on any other cryptocurrency clones.
The bitcoin blockchain is the only blockchain that has scale, resilience and trust. Bitcoin is the only use-case for blockchain technology that has succeeded in any meaningful way to date, and is the only working commercial application of blockchain technology.
The only blockchain that works with proven utility at scale is the bitcoin blockchain.
Only the bitcoin blockchain is trusted, secure, immutable and reliable enough for business.
  • What are your comments for the sceptics? Forbes Magazine recently published an article suggesting Bitcoin is “about to self destruct”. Do you disagree and why?
Bitcoin is always "about to die" or is "dead" somewhere in the world. There is even a bitcoin obituary website that has links to over a hundred different articles and news posts saying that bitcoin is dead. If you mean dead as in cease to exist, it will never die as long as there is at least one person in the world running the bitcoin software. Most articles claiming it is about to self destruct or similar are click bait or written by people who dont really know what they are talking about. Bitcoin is here to stay....the price of bitcoin might go down and there might be articles saying it is 'dead', but it will still technically work as it should.
  • Where is Bitcoin going? What lies ahead here in South Africa and around the world?
There are a lot of new and exciting things waiting on the sidelines for bitcoin. The use of the bitcoin blockchain for money is only the tip of the iceberg. As the next round of improvements to the software are implemented, we will see amazing applications coming. Just like when the internet first started, nobody could even fathom that you would be able to stream live video, the same is true for bitcoin. We have no idea of the amazing things that will be done in the future with blockchain technology. Money is just the first application of the technology, just like email was one of the first great applications for the internet.
  • What else do South Africans need to know about Bitcoin?
To invest in bitcoin, you only need to own some bitcoin. If you invest in gold, you only need to own some gold, it is the same principal. To invest in property, you only buy property, the property, gold, or bitcoin appreciates or depreciates in value, and you can make a profit or loss when you sell it.
There is no interest earned with bitcoin, and no table of earnings for bitcoin, just like with owning gold. There are no fees to join, there is no account manager to pay or subscription to pay, be weary of 'investment' websites that ask for these things. Any website that is advertised as a bitcoin investment website or system of earning bitcoin is probably a scam or pyramid scheme that just wants you deposit your bitcoins. Stay away from websites where you 'earn bitcoins', as well as "get rich quick" schemes using bitcoin.

The best way to invest in bitcoin, is to just buy bitcoin, and secure it in your own bitcoin wallet. Do not store your bitcoin on a bitcoin exchange, keep it in your own bitcoin wallet off a bitcoin exchange that you control the private keys for. Use a bitcoin exchange to deposit and exchange Rand and bitcoin, then withdraw your funds.

If you would like to invest in bitcoin, dont take the easy or lazy route and trust other people or websites, learn about it and get educated on everything to do with bitcoin. If your money is at risk, dont trust anyone else, look after your own bitcoin on your own secure bitcoin wallet.

If you are not trained in trading of stocks or forex, do not try and be a bitcoin trader and play the market. You will most likely get eaten alive by savvy traders out there and lose your money.
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