What are Bit­coins and are they safe to use?

Chronicle (Zimbabwe) - - Business - Robert Ndlovu

BIT­COINS are a new cur­rency that was cre­ated in 2009 by an un­known per­son us­ing the alias Satoshi Nakamoto. Trans­ac­tions are made with no mid­dle men – mean­ing, no banks! There are no trans­ac­tion fees and no need to give your real name. I bet you will get a dozen dif­fer­ent an­swers from dif­fer­ent “ex­perts” who are nei­ther in the ICT fra­ter­nity nor bank­ing in­dus­try.

Many peo­ple rely on so­cial me­dia for in­for­ma­tion and news. Not ev­ery­thing that is said on so­cial me­dia is good or bad per se. One has to con­duct her own re­search and es­tab­lish what this form of dig­i­tal cur­rency is and whether is safe to use to trans­act. Be­sides that there are a lot of ques­tions I re­ceive in my in­box be­cause I have touched on the is­sue be­fore. Ques­tions that peo­ple follow:

Where are Bit­coins stored? Bit­coin’s most im­por­tant char­ac­ter­is­tic, and the thing that makes it dif­fer­ent to con­ven­tional money is that it is de­cen­tralised. No sin­gle in­sti­tu­tion con­trols the Bit­coin net­work. This puts some peo­ple at ease, be­cause it means that some large bank can­not con­trol their money.

A Bit­coin net­work is made up of thou­sands of in­ter­con­nected net­works that main­tain a ledger of all trans­ac­tions made. Ev­ery Bit­coin user can have ac­cess to the ledger but can never know the name of the trans­ac­tors as they have en­crypted or se­cret codes for se­cu­rity.

How do I get them? Or­gan­i­sa­tions like Coin­desk, Bit­coiner, which are based over­seas and a few in Zim­babwe are Bit­coin ex­changes. These en­able end users to buy and sell their Bit­coins. They do not keep Bit­coins they have data houses that store ledgers known as Bit­coin chains. The chal­lenge in Zim­babwe is lack of forex. This has driven the rate of ex­change up. So try­ing to buy a Bit­coin us­ing say, EcoCash, works but it is pretty costly up to 40 per­cent in­ter­est rates.

How do I use them? You have to go on­line and open a Bit­coin wal­let. After that you must load it with some “juice”. If this process is cum­ber­some there are con­sul­tants here in Bu­l­awayo like ZimBitCoin who can open an ac­count for a small fee. After your wal­let is opened then, you will have a unique wal­let ad­dress that you must print and keep un­der your “bed” for safety. You can down­load an ap­pli­ca­tion to buy and sell your Bit­coins to buy items from Ja­pan, Rus­sia, UK, South Africa and be­yond. This is the rea­son why Zim­babwe in gen­eral must adopt Bit­coins so as to source crit­i­cal raw ma­te­ri­als for their busi­ness op­er­a­tions. I am in Di­as­pora how do I get in­volved? It is pretty easy. In­tro­duce your rel­a­tives, friends or busi­nesses back in Zim­babwe to come and sign up for a Bit­coin wal­let here in Bu­l­awayo. It is more ad­vis­able for them to come in per­son and deal face to face with the Bit­coin ex­change for sign up and reg­is­tra­tion pur­poses with Coin­base, Coin­desk or ZimBitCoin.

Do these ex­changes keep our monies? No. These ex­changes fa­cil­i­tate trans­ac­tions be­tween par­ties. Bit­coin is not like a bond note or rand coin or debit card that you can phys­i­cally touch. It is a set of math­e­mat­i­cal com­bi­na­tions (keys) used to trans­fer own­er­ship. Ad­vanced BTC over­seas do not charge even a cent to sign up. Here in Zim­babwe we have to source the Bit­coins (BTC) in hard cur­rency. Trust me no one wants to keep peo­ple’s monies. Your BTC wal­let is yours with your key and pass­word. Store it care­fully. Do not share it. Pro­tect it the same way you pro­tect your bank card PIN or Mo­bile Money PIN. You are re­spon­si­ble for the se­cu­rity of your own wal­let ac­count. Bit­coin ex­changes help you get hooked up with rep­utable companies that have traded for long.

Is it le­gal to use them in Zim­babwe?

RBZ is still try­ing to come up with some pos­i­tive leg­is­la­tion for Bit­coin ex­changes. But one thing they can­not do is to ban its use. It’s like say­ing peo­ple must apply to the tele­com reg­u­la­tor Potraz to open a Gmail ac­count. Banks nat­u­rally do not like BTC be­cause pay­ments are be­tween you say, Sihle based in Kezi to Yi Ling in China to buy 100 bags of shirts. The trans­ac­tion does NOT have any bank charges. Charge lit­er­ally. Yes you heard me right. I have been us­ing this for about 10 years. So banks will frown at this the same way they frowned at mo­bile money wal­lets. It is now dig­i­tal money wal­lets. You get it? Gov­ern­ments all over the world can­not do much. The same way you can­not con­trol or shut down the in­ter­net. BTC runs on a net­work that can­not be de­stroyed from a sin­gle point. Their worry ranges from that peo­ple might buy il­le­gal items and trade in bad things, which makes sense. So do not use BTC to buy “mbanje” whose use is il­le­gal in Zim­babwe. I use it to buy mainly soft­ware, ICT equip­ment, air tick­ets and soon to tithe! What about those who say it is fraud or a

pyra­mid scheme? Pyra­mid schemes have been in ex­is­tence from time im­memo­rial. These are schemes where peo­ple are en­ticed to buy a prod­uct or ser­vice at a fee and then in­vite oth­ers into the net­work. Those who sign up first reap more. But then there comes a time when those lower in the ranks of the pyra­mid, have no one to pay them and it col­lapses. This ap­plies to any prod­uct. With Bit­coins it is dif­fer­ent be­cause once you buy them they are yours. Whether you in­vite one per­son or 10 peo­ple to the net­work it mat­ters less to the fact that the dig­i­tal coins be­long to you. There is money to be made but not those fake $ 10 000 per day su­per pro­mo­tions nga­manga.

In­tro­duc­ing more peo­ple helps in­crease the level and vol­umes of trade. Why? More and more shops will then ac­cept BTC. When in­tro­duc­ing peo­ple do not mis­lead them by say­ing that they will make a mil­lion in the first year. Of course the more you re­fer the more com­mis­sion. What kind of items can you buy with

them? Cars, fer­tilis­ers, elec­tronic goods, com­put­ers, cloth­ing, chem­i­cals, tents, food, air­line tick­ets, ho­tel book­ing, ARV med­i­ca­tions and so forth, I could go on. BTC trans­ac­tions are non-re­pu­di­a­ble.

This means that once you send them there is no going back. Un­less the re­ceiver sends them back to you. Re­mem­ber Bit­coins are de­cen­tralised, anony­mous and owned by no one per­son. Just ex­er­cise cau­tion when trad­ing on­line. I run a busi­ness, how can I get in­volved? The process is the same. But now it means that you will ad­ver­tise that “BTC ac­cepted here” just like Mastercard, Zim­switch, Visa, EcoCash pay­ment modes. Noth­ing can be eas­ier than this. How much is a Bit­coin to­day? The value of the Bit­coin fol­lows sup­ply and de­mand me­chan­ics. It can­not be fixed. While typ­ing this doc­u­ment it was 1 BTC = $4 802. It is driven by market forces. In 2009 it was about $0. 40! And five years ago it was about $4 794. Google the price fluc­tu­a­tions and you will know more. Where can I get more info about BTC? Do some re­search on­line. Ask those who know about it and also there are weekly train­ing ses­sions and sem­i­nars that are held weekly in Bu­l­awayo for in­di­vid­u­als and or­gan­i­sa­tions.

Send your ques­tions and com­ments to de­tails pro­vided be­low. I could not cover ev­ery­thing here so send ques­tions and com­ments that will be the ba­sis of what peo­ple know or do not know about Bit­coin. zimbitcoin@gmail.com App – 077 600 2605

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