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What is Bitcoin and the Blockchain?

What is Bitcoin?

Bitcoin is the first decentralised digital currency in the world. It was introduced in 2008 by an anonymous developer named Satoshi Nakamoto.

Bitcoin operates on peer-to-peer technology and does not require any bank or a financial institution as an intermediary. Bitcoin can be used to purchase goods and services online, make cheap international money transfers and it is also considered as one of many innovative new ways to invest your money as its price has been increasing substantially as its adoption is growing globally.

What is the Blockchain?

The blockchain is the underlying technology that the cryptocurrency bitcoin is built on. The blockchain is an immutable open-source distributed ledger network that publicly records all bitcoin transactions. The digital ledger can be viewed at Blockchain.info.

The blockchain is upheld and updated by all network participants who utilize their computing power to maintain and secure the bitcoin network in real-time. Hence, if some participants of the bitcoin network fall victim to an attack, the network remains functional as it is a decentralized peer-to-peer network. The bitcoin blockchain participants also verify and process all transactions on the bitcoin network. For this service, these bitcoin network participants receive new bitcoins through what is referred to as mining.

Furthermore, due to its open-source nature, the code for the blockchain can be changed to create new digital currencies but it can also be augmented so that it can be employed for non-financial uses.

For example, new blockchains could be used for transparent voter registration, to record proof of ownership of assets or land and intellectual property or for digital identity verification. The possibilities for the potential uses of the blockchain are almost limitless. That is also one of the primary reasons why there has been such a hype around bitcoin and the blockchain in the tech space.

Where can you buy bitcoins?

Bitcoin can be bought via digital cryptocurrency exchanges or on a peer-to-peer basis using LocalBitcoins.com.

In Africa, the most popular centralised cryptocurrency exchanges are Ice3X and BitX. However, the majority of bitcoin transactions in Africa occur over the peer-to-peer exchange LocalBitcoins.com.

What can Bitcoin do in Africa?

One of bitcoin’s key selling points is its low transaction fee when conducting money transfers regardless of the location of the sender and the recipient. Hence, the biggest case for bitcoin adoption in Africa is for remittance purposes. However, the use of bitcoin as a spending currency could also be very beneficial to the underbanked communities of Africa that often rely on cash-only transactions.

Mobile Bitcoin WalletThe blockchain, as mentioned above, could be used in all sorts of ways in Africa. Its potential uses range from voter registration to proof of land ownership and even the reduction of corruption. While it will remain to be seen whether the digital currency bitcoin will become a viable everyday spending currency. Its underlying technology, the Blockchain, will without the shadow of a doubt make its impact in Africa for the better of its communities.

Alex Lielacher

The author Alex Lielacher

Alex is the founder and editor-in-chief of BitcoinAfrica.io. He is a former investment banker who has been following bitcoin and blockchain technology since 2011.