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Inside the Hidden World of Egyptian Bitcoin Miners

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Egyptian Bitcoin Miners

Egypt’s unfavourable regulatory environment has made bitcoin adoption more difficult in the North African country. Nonetheless, Egyptians are secretly buying and selling the digital currency on peer-to-peer exchanges while a hidden network of cryptocurrency miners has emerged to take advantage of cheap energy to stealthily mine bitcoins.

Egypt’s Underground Bitcoin Mining Scene

Globally, people are using their computers to mine bitcoin. However, in Egypt bitcoin miners operate under a veil of secrecy. Bitcoin miners have established an underground network away from the public eye, with only a few even willing to speak to the media.

The bitcoin underground is fuelled by market regulators whose negative stance towards cryptocurrencies has made it difficult for bitcoin traders and miners to go about their activities. The Central Bank of Egypt refuses to accept digital currencies and recognizes only the Egyptian pound as legal tender. While transacting in cryptocurrencies such as bitcoin is not illegal, the authorities are seemingly willing to take action against any bitcoin-related activities within its jurisdictions.

Speaking to Cairo Scene under a pseudonym, Hussein, a bitcoin miner, argues the law is rather ambiguous when it comes to bitcoin and thus most people are concerned about being discovered.

“I believe what I’m doing is legal. When people get arrested for mining it’s usually because they’re caught with black market foreign currency exchange, or they’re forging money and they just happen to have mining rigs or bitcoin on them. The authorities see this and therefore associate cryptocurrency with illegal activity,” he stated.

Therefore, it makes sense that the mining community would adopt a defensive attitude. What is puzzling is bitcoin is not technically off-limits so why go to such great lengths to remain concealed? Hussein explains,

“The recent statements they’ve given say mining is not illegal, but it can get you into trouble for sure. I think the administration is trying to understand cryptocurrency, but they’re still in the process of learning more. I’m 99 percent sure that if they knew more about it, it’d be fully legalized in Egypt…. Legal like in Japan, the US, England, Europe, legal like in most countries.”

How is Bitcoin Mined in Egypt?

Bitcoin mining is the process where miners contribute their computing power to solve complex algorithms to confirm and process transactions on the bitcoin blockchain. For that, they are rewarded with fresh bitcoins. The higher the computing power the larger the reward. This is why mining farms have been created, hosting scores of computers with extra processing power to earn more bitcoins.

Currently, Ethereum is the most frequently mined cryptocurrency in Egypt on account of it being the most profitable mining option and its mining hardware being easily accessible locally. Bitcoin is usually mined through special hardware called ASICs whereas Ethereum is mined through graphics cards (GPUs), which is a standard for gamers and video editors who require heavy processing capabilities.

However, the reality of mining in Egypt is quite different from the usual set up found in other countries. Spread across the busy metropolis of Cairo are multitudes of hidden farms where digital currencies are mined every day. You will discover the people who participate in the mining are not your typical hackers or tech aficionados typing away late into the night.

A perfect example would be Hussein, who is a  former economics student, but decided to try his luck in the male-dominated bitcoin mining scene. A spot check across Egyptian digital currency interest groups on Facebook and Whatsapp also reveal very few women in the bitcoin space.

Having said that, despite the community being composed of different professions such as economists, doctors, entrepreneurs, and coders, they are united by the prospect of cashing in on bitcoin’s volatility, and the process of earning the worlds most valuable cryptocurrency through mining. The question then arises, why Egypt of all places?

Lower Mining costs in the Form of Cheap Electricity

The typical mining setup includes a PC working at all hours converting maths into money. The process requires a lot of energy in order to prevent the hardware from overheating and getting damaged; since the inbuilt PC fans are not enough to handle the heat produced by the constant heavy workload. Therefore, external fans and air conditioning are required to lower the temperatures in mining farms.

Surprisingly, as demanding as it can be to keep things cool in Egypt’s arid environment, the cost of electricity is cheaper compared to other developing economies. This has encouraged the local cryptocurrency mining boom due to the low overheads involved. Hussein points out,

“Until recently, energy was subsidized, and a lot of people don’t even pay for electricity, which is sad. But that’s part of why it’s more profitable to mine in Egypt… Yes, of course, I pay my electricity bill.”

For Mohammed, a Cairo-based Ethereum miner, the mining craze is fueled by more than just cheap electricity. He believes how you pay for the energy plays a significant role in making the endeavour more lucrative. “I think it’s better to mine in Egypt because you pay your energy bills in local currency, but you get your investment back in cryptocurrency.”

He explains that bitcoin, which acts as a digital asset, has retained value more reliably than the inflation-prone Egyptian pound. That combined with the cheap energy has led to some expats to consider moving back to Egypt.

Bassem is an Egyptian who presently resides in Qatar and runs a bitcoin mining farm. He owns a fleet of ASIC machines that are optimised to mine non-stop and churn out bitcoins. He started mining in Doha on account of the free electricity being provided but has now set his sights on returning to Egypt this year. He is not that worried about leaving behind the free energy as he calculates his farm will still make a good profit once he deducts electricity costs.

What are the Benefits of Cryptocurrency Mining in Egypt

For Egyptians, cryptocurrency mining has changed their financial fortunes. A case in point would be Hussein who developed an interest in digital currencies due to his economics background. He learnt about bitcoin through YouTube videos and started mining in 2012. He then quit his job and moved back to Egypt, something that would not have been possible without the income he receives from mining digital currencies.

“[Cryptocurrency mining] has enabled me to take the time to think about my future plans, rather than worry about monthly expenses. Especially in Egypt, by mining, you can make enough money to just live. Depending on market fluctuation, a one-time 50,000 LE investment in equipment can earn the equivalent of about $400 a month.”

Hussein who is also a cryptocurrency trader insists he has made more money on cryptocurrency than investing in real estate. The new coins he earns are converted to fiat currencies by trading them at the exchanges for a profit. But not only are individuals making money out of crypto mining, local hardware dealers are cashing in on the demand for mining hardware. According to Mohammed, hardware importers are not only making good money but a number of them have joined the bandwagon and taken up mining themselves. Hussein had this to add,

“Mining in Egypt is booming, but one issue is the equipment; when the price of Ethereum spiked, demand for GPUs was high and stores couldn’t stock enough of them… Getting GPUs in Egypt is kind of like getting drugs. It’s actually easier to get drugs than to get GPUs sometimes.”

On the debate by some critics from some Muslim countries who claim that cryptocurrencies might be haram if it is viewed as making money out of nothing, Hussein had this to say, “If the monetary system is haram, then sure, bitcoin is haram,” he began. “But in my opinion, it’s not. The trading aspect is definitely not; it’s a mutual agreement, and bitcoin is equal to money, which we already use. And you can actually see a lot of religious people mining bitcoin.”

While bitcoin mining may be unappealing for most due to the high energy requirements and the technological complexity, for Egyptian cryptocurrency miners the process is quite very rewarding.

Mohammed states,

“I believe in the future of cryptocurrency – nobody can refute it. It’s already happening now, some countries are already making bitcoin official. I hope that Egypt uses it eventually. They have to know that people here are using it now, that people believe in it and put their trust in it.”

Source: CairoScene.com

Bitcoin

Kenya Blockchain Event in Nairobi Records a Huge Turn Out

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Kenya Blockchain Event

December 10, 2017, saw a large number of bitcoin experts, enthusiasts, investors, newcomers, and traders converge at the Metta Entrepreneur’s Club Nairobi. The atmosphere indicated an increased desire among Kenyans to understand and discuss cryptocurrencies at length.

The four-hour discussion was detailed, explicit, and informative. Key speakers included Michael Kimani, Daniel Nyairo, Janet Kemunto, Damaris Njoki, and John Karanja among others. These cryptocurrency experts had a lot to share and plenty of advice to give. Thanks to their endless efforts, the crypto scene in Kenya is presently buoyant.

Is Bitcoin Valuable?

According to Michael Kimani, bitcoin is valuable.

“The bitcoin surge is more than just speculation. A substantial number of people are purchasing bitcoin because they believe in its future. These people are betting on the future because there is proof that the underlying technology (blockchain) actually works,” he said.

Is Bitcoin in a Bubble?

2017 has been a great year for cryptocurrencies.

“I have been in the technology sector for ten years and I have never seen anything grow as fast as cryptocurrencies have this year,” John Karanja, the founder of BitHub Africa, said.

The bitcoin price has risen by more than 1,500 percent in 2017. Surprisingly, altcoins like ether have risen by a higher percentage than bitcoin this year. Still, bitcoin is taking the lead with its current price of over $16,000. The recent surge has left many wondering: is bitcoin in a bubble?

In the opinion of Mutai, a software engineer, “Bitcoin is somewhat in a bubble because the underlying technology is being overlooked. Currently, the bitcoin price is keeping up with the pace of speculation.” Nevertheless, the self-taught tech expert believes that bitcoin is worth it in the long-term.

Where Can Kenyans Buy Bitcoins and Altcoins?

Expert recommended exchanges are Belfrics Kenya, Kraken, Bitstamp, and Bittrex. Other platforms such as peer-to-peer (P2P) markets are also great places for purchasing crypto.

Localbitcoins, Paxful, and Remitano Kenya are suitable P2P markets.

Tips On Cryptocurrency Investments

Advising clients on cryptocurrency investments is a full-time job for George Mang’eni, an experienced trader at the Nairobi Securities Exchange (NSE). “Keep calm & HODL,” he advised attendees at the event.

Bitcoin investments are made through mining, trading, and HODLING (Holding On for Dear Life). Mang’eni recommends investors to conduct a fundamental analysis and create a portfolio before investing in cryptocurrencies. “Always invest in an asset that is higher than the inflation rate,” he said.

A fundamental analysis involves looking into the following:

  • Real-world application of the cryptocurrency
  • Researching the reputation and achievements of its developers
  • The big investors involved
  • Liquidity
  • Crypto supply limits
  • Transaction processing system

Security is a Priority

Any person who owns crypto knows that security is everything. The crypto scene has attracted a lot of scammers, hence the need for caution.

Daniel Nyairo, a cryptocurrency freelancer stated, “Scammers use social proof to steal from unsuspecting customers.” The social proof marketing technique is often used to make customers feel like they are missing out. “A person selling bitcoins to you while trying to influence your emotions should be a red flag,” Nyairo warned.

With regards to ICOs (Initial Coin Offerings), attendees were advised to research thoroughly before investing. “Investigate the authenticity of the names and images of those behind the project,” Nyairo stated. Furthermore, he emphasised the need to carefully scrutinise business models, business descriptions, and business processes of the companies launching ICOs.

The Three Kenyan Women Thriving in Cryptocurrency Trading

Kenya Blockchain Event NairobiAccording to Damaris Njoki, Juliana Mwangi, and Janet Kemunto, bitcoin trading is a rewarding employment opportunity. “We do not work for the money; the money works for us,” Kemunto said.

Juliana and Kemunto both left their jobs to take up bitcoin trading as a full-time job. “Cryptocurrencies are the future. I love what I do,” Juliana asserted.

Trading bitcoin requires two things: trust and 0.2BTC. “My job is not about meeting the margins; it is about the client,” Kemunto said. “My goal is taking care of the client and in turn, the client takes care of me.”

The main challenge that these women face is a low supply of bitcoins. Other than that, the demand for bitcoins is huge. “We have markets not only in Kenya but also in China and the UK,” Damaris said.

Meet Kenya’s Popular Miner Eugene Mutai

Mutai has been making headlines as the only crypto miner in Kenya for a while now. The millennial states that it took him two months to put his mining rig together. “For a non-tech savvy person, it might take longer,” he said.

Mutai mines Zcash and other altcoins. “I began with a modest budget and it took me around 8 months to break even,” he explained. Cloud mining is one and a half times more expensive than mining individually,” he added.

Two-thirds of what Mutai mines are his profits. The rest goes into electricity and Internet costs. Nevertheless, he faces two challenges that result in the loss of two months of mining yearly. “I need to back up my Internet in case my main connection fails me. On the other hand, I experience electricity blackouts on average twice every week,” he said.

Kenyan Regulators are Lagging Behind

Cryptocurrency regulation in Kenya is still a major topic mainly because little is taking place. “Kenyan regulators will find themselves playing catch up,” William Mutiso, a crypto trader said. Kenya has lost the business from startups such as Kipochi and BitPesa because of poor regulations.

“There is need to keep these conversations going to show regulators the extent of crypto interest in Kenya,” Eddie Ndichu, a cryptocurrency enthusiast, noted.

Upcoming Startups and Events

Despite regulation setbacks, the Kenyan crypto space is taking in new startups as fast as new ideas are conceivable. Some of the startups under the works are JijiPlan and Pesabase. Other startups like ChamaPesa are also about to launch.

Besides startups, Kenyans should watch out for upcoming crypto events such as a mining class that Mutahi will be teaching. The mining class targets those interested in mining as individuals as well as cloud mining.

** This article has been retrospectively corrected by the editor.

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The State of Bitcoin in Botswana

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Bitcoin in Botswana

Botswana may not be the first country that comes to mind when thinking about bitcoin and blockchain innovation but the Southern African country is home to a small but active bitcoin economy that encompasses startups, meetups, a blockchain hub, and bitcoin trading WhatsApp groups.

To receive local insight into the current state of bitcoin in Botswana, Bitcoin Africa spoke to Satoshicentre founder and Botswanan bitcoin thought leader Alakanani Itireleng.

The Local Bitcoin Community

According to Ms. Itireleng, the introduction of bitcoin cloud mining and multi-level marketing schemes has been a key driver of bitcoin adoption in Botswana. There has been a lot of interest in these types of make money online schemes in Africa and this interest has also helped to boost bitcoin awareness in Botswana. 

Meetups held by the blockchain hub, Satoshicentre, have also helped to spread awareness about the benefits that digital currencies and blockchain technology can provide.

Bitcoin Trading in Botswana

There is currently no bitcoin exchange in Botswana and at the time of writing, there was only one offer on the global peer-to-peer bitcoin exchange LocalBitcoins to buy bitcoin using the Botswanan pula. Not surprisingly, therefore, most bitcoin trading occurs through bitcoin trading WhatsApp groups and in dedicated Facebook groups.

Some Botswanan bitcoin users prefer to use South African exchanges such as AltcoinTrader, which allows direct bank deposits, and those with friends or relatives in South Africa often use Luno to buy and sell cryptocurrency.

According to Ms. Itireleng, Botswana is still in search for a local bitcoin exchange that can meet local demand. Bitcoin exchange, Belfrics, which recently launched in Kenya, has announced that it would launch in Botswana as well at some point in the future. Having a local exchange would likely boost adoption and help to grow Botswana’s bitcoin economy.

The Bitcoin Startup Scene

Currently, there are three notable blockchain startups in Botswana. The Satoshicentre, a blockchain hub run by Ms. Itireleng, Plaas, a blockchain-based farming platform provider, and Kgoboko, a blockchain-powered financial services platform for the unbanked launched by IndieStudio Africa.

The Satoshicentre is a blockchain hub that was founded in 2014 by Ms. Itireleng with the mission “to provide disruptive Innovations with the sole purpose of changing the way we carry out our daily routines and processes with ease through the help of the Blockchain.”

Plaas is a startup launched under Satoshicentre, founded by Alakanani Itireleng, which is working with various blockchain experts around the world, including BitcoinTracker and Bitsoko, to develop a mobile application that enables farmers and farming cooperatives to manage their daily farming productions and stock on the blockchain.

IndieStudio Africa launched Kgoboko, a financial services ecosystem that aims to address the needs of the unbanked in emerging markets. The startup aims to solve the problem of restricted access to funding and investment as well as low uptake and awareness of cryptocurrencies in Africa.

Cryptocurrencies Remain Unregulated

Currently, the Bank of Botswana (BoB) has not issued any regulations in regards to cryptocurrencies or the use of blockchain technology. According to Ms. Itireleng, the central bank has stated that it currently has no intention of regulating or studying cryptocurrencies. However, she believes that as more blockchain startups will launch in the country and more businesses will start to accept digital currencies, the regulator will be forced to take a closer look at this new technology.

When talking about bitcoin in Africa, Botswana should not go unmentioned. While the country does not have the sizable bitcoin economies of Kenya, Nigeria, and South Africa, it has developed an active bitcoin community that is working on local blockchain solutions and is spreading cryptocurrency awareness. 

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12 Facts About Bitcoin You Were Probably Not Aware Of

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facts about bitcoin

2017 was the year that the digital currency bitcoin officially became mainstream. Thanks to its impressive price rally throughout the year, which was extensively covered by global media, most people will have at least heard of bitcoin at this point in time. However, there are things about bitcoin that not everyone knows about. In this article, you will discover 12 facts about bitcoin that you were probably not aware of.

1. The Inventor of Bitcoin is Unknown

“Satoshi Nakamoto” is the pseudonym that was used by bitcoin’s creator(s). The mysterious identity of the bitcoin creator(s) has led to a lot of speculation but no conclusive evidence of the identity has yet been published.

“Satoshi Nakamoto” is currently worth about $13 billion and is a nominee for a Nobel Prize in Economic Sciences. He last made a public post in 2011.

2. No One Actually Controls Bitcoin

Bitcoin is not owned by any government or central bank and thereby gives its users the freedom to be their own bank. However, governments can declare the use of bitcoins illegal like countries such as Ecuador and Bangladesh have done. As a matter of fact, anyone caught using bitcoins in Bangladesh can earn themselves time in prison.

In light of this fact, some countries might ban bitcoin but users can still go about and buy and sell the digital currency regardless as governments cannot stop the decentralised peer-to-peer network that bitcoin is built on.

3. Bitcoin Has a Limited Supply

There can only ever be 21 million bitcoins in circulation thanks to the way that bitcoin has been coded. The 21 million coin limit will be reached at around 2140. Currently, there are around 16,725,000 million bitcoins in circulation.

This limited total supply is one of the reasons why bitcoin has increased in value so much as it is a scarce asset.

4. There are over 20,000 Bitcoin Millionaires

According to Bitcoin Rich List, there are over 20,000 bitcoin millionaires. In fact, some millionaires have turned into billionaires. According to CNBC, Cameron and Tyler Winklevoss have become the first bitcoin billionaires thanks to the recent surge in the bitcoin price.

5. Bitcoin is Actually Highly Transparent

The media often claim that bitcoin is anonymous but that is far from true. Bitcoin transactions can actually be very transparent.

“If I have all my bitcoins in a single address and keep reusing it, everyone I ever interact with can follow everything I do. This makes bitcoin the most transparent money system ever created,” said Marco Carnut, founder of CoinWISE, highlighting how transparent the bitcoin system can be when it is being used in a particular way.

6. Supercomputers Have Nothing on The Bitcoin Network

500 supercomputers combined are less powerful than the bitcoin network. Presently, the bitcoin network has a hash rate of over 14,867,776 TH/s, which is way more than the world’s most powerful supercomputer.

7. The Bitcoin Network Uses More Energy Than Most African Countries

report compiled by UK-based energy comparison platform, Power Compare, states that the power consumption from bitcoin mining is currently estimated at over 30 TWh per annum, which is more than that of 159 individual nations in Europe, Africa, and America.

In fact, only Algeria, Egypt and South Africa use up more power than the bitcoin blockchain.

8. Bitcoin Transactions Cannot Be Easily Refunded

Your bitcoin wallet is so precious that if you lose it, you could lose your coins forever (unless you have backed up your wallet!). What’s more, bitcoin transactions are non-refundable so if you make a mistake about the amount or the recipient wallet address that money is likely gone forever. Unless, of course, your counterpart is so friendly as to refund you the amount.

9. You Can Live Solely on Bitcoin

Austin Craig and Beccy Bingham created a documentary called “life on bitcoin” to prove the statement: “man can live on bitcoins alone.”

The documentary illustrates that a married couple can actually live on bitcoin for 90 days.

10. The FBI Was a Major Bitcoin Holder

The FBI once possessed around 1.5 percent of the world’s bitcoins. After shutting down the dark web marketplace Silk Road in 2013, the FBI confiscated 144,000 bitcoins, which were later auctioned. The US government made $48 million from the auction. Unfortunately, its shutdown did not prevent more black markets from cropping up. Google search results depict the existence of a Silk Road 3.1.

11. Several Major Corporations Accept Bitcoin Payments

You can make payments in bitcoins to companies such as Dell, Microsoft, and Overstock. That means that you can pay for laptops, hotels, and throw pillows with bitcoin.

In Africa, there are also several online retailers that have started accepting bitcoin as a payment method.

12. The Early-Bird Advantage

If you had invested $100 worth of bitcoins in 2010, you would be a bitcoin millionaire in 2017. For example, Barry Silbert, the founder of Digital Currency Group, bought 48,000 bitcoins from the Silk Road auction in 2014.

At that time, one bitcoin was worth $350. In 2017, Silbert’s investment has increased over 16 times and has made him a very wealthy man.

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