Try telling your African parents that you are buying a web developer’s code to trade in cryptocurrency (english: not real money) where the profits can be used at selected online stores. Yes, the same parents who still call you downstairs to pass them the remote or make them some tea.
After they have summoned your ancestors, dunked your head in the river for your deliverance and then call uncle Dayo to sacrifice a lamb for this quote on quote “mad child” maybe try explaining it to them in this way…
Bitcoin is used through a system called Blockchain technology. Blockchain is an open source framework which means everyone’s transactions are visible and that makes it almost impossible to make uncertified transactions.
So why do many people still think it’s shady? Well, two reasons:
- Culturally this is a very new practice.
Traditionally we traded gold coins for services or products, today in some cases we still use physical gold or money as a form of trade. What made gold a good means of trade? There are three factors:
- It’s rarity: a piece of gold is not easy to mine or find so it’s rarity gives it value. There is a limited supply available and possessing the gold means you have some of this supply. The more you have, the more value or monetary power you hold.
- It’s not easy to counterfeit: no person on the street can replicate the gold coin you hold, it would take immense technology and resources to do so
- It is easily identifiable. When you see a dollar, euro or rand coin – you recognise immediately what it is.
Bitcoin emulates all of these points. There are only a limited supply of bitcoins available. It is very difficult to copy or “mine” coins, even for high level coders, you would need extensive resources in terms of processors and electricity to do so. And each bitcoin (essentially a piece of code) is easily identifiable as a unit of digital currency.
2. No one knows who invented it
So this is the shadiest part – we don’t really know what where it comes from. All we know is that is was invented by Satoshi Nakamoto. We do not know if he is one person or a group, if they are still alive (it was developed in 2009) or where they are today. I have a sneaky suspicion based on his name, that he has a hairstyle like Goku from Dragonball Z. I also think he may have African roots – maybe he didn’t think people would buy into such a product if they knew he was African? This is what I think he looks like (#mcm):
I digress… anyway… Bitcoin was not the first type or crytocurrency invented. There were several others before it and still today quite a few others exist. For some reason, Bitcoin seems to have taken the most traction globally and surprisingly it is growing really well on the African continent.
So how does it work and how do you actually use it?
On the African continent there are two ways to access Bitcoins:
In East Africa and Nigeria, you would use BitPesa
In South Africa, the portal to use is Luno.
You would use your real money to buy any fractional part of a bitcoin, one whole coin costs over 2500 USD at the time of this article. Then you can trade from the same platform or a third party trading site such as Poloniex.
You’d need to understand basic level principles of as trading such as calling long or calling short, high/low price, etc. The money you put in to start off with is really up to you. I would suggest go in with around 50-100 USD and try playing the system. If you have some trading background or know-how, the Bitcoin platform is a great way to practice trading skills without breaking the bank.
So you try playing around and actually make a pretty penny or two. What then? The biggest drawback of Bitcoin and why I was a sceptic to at the beginning – is that it is not real money. You can’t take the bitcoins and go shopping at auntie Funke and uncle Dayo’s grocery store. Bless.
What can you do? In South Africa, takealot.com accepts bitcoins as payment and you can actually buy quite a few nice things from there. The Luno portal allows you to withdraw the real money value of the bitcoin into your South African bank account. As much as the bitcoin is not real currency, the gains you make can be transferred into real cash from your local online provider and then used as money in the real world.
From BitPesa, you can do trade in East Africa, Nigeria and China with other members on the platform. You can also withdraw the money into your account through BitX wallet available from Luno.
The verdict? You would need an understanding of financial markets and some basic experience in trading to actually trade in Bitcoins. It is connected to major banks for withdrawal of the cash, the system is super easy to use and the returns are good if you know what you’re doing. So far it seems pretty legit and worth a try.
Candice Simone is a digital business developer for NubiaNetwork. She writes content and does the online marketing, research for the agency. Previously she worked in the chemical industry where she was a business developer for the sub-Saharan African region. Her interests are old school hip hop, digital innovation and all things African.