Busha - Learn the Basics of Cryptocurrency

Crypto basics

Ready to embark on a journey to gain valuable knowledge on the subject of blockchain and cryptocurrency? Here’s the perfect starting point!

What is Cryptocurrency?

Crypto vs Fiat money

Advantages of Crypto over Fiat money

No Inflation:

Fiat money is prone to inflation over time, a million Naira does not have the same buying power today that it did ten years ago. The issuing government can print more notes whenever necessary and increase the supply of the currency in circulation thereby depreciating the value of the currency. For cryptocurrency, the total amount of the currency that will ever be in circulation is specified by an algorithm from the beginning so it is impossible to inflate its supply. Its value does not decrease over time, only market factors can affect its value.
Global mobility:

Cryptocurrency facilitates cross-border payments faster and easier than fiat money can ever hope to. Using fiat for cross-border transactions requires that you give the bank private information and you have to rely on them to set up the transaction. With crypto, there are no borders and international transactions are instantaneous.
Privacy:

Currently, the central banks have control over every information passed during a fiat transaction. Whenever you initiate a wire transfer or payment, the banks know exactly how much you are sending and who you are sending it to. With Crypto, the transaction details are still made public in the ledger, but all personal information is kept private and secure.

Crypto vs Fiat: Conclusion

	Crypto	Fiat
What is it?	Digital currency that runs on computer codes	Local currency backed by the government
What determines its value?	The basic laws of supply and demand.	Trust in the government that issued it.
Security	Guaranteed by a network of computers	Secured by banks and governments
Buying Power	Depends on merchants who accept it	Can buy but only in the country of issue
Physical bills or coins?	No	Yes

About Bitcoin Mining

The term “mining” brings to mind digging out or extracting minerals like Gold from the earth. Although this is not the case with Bitcoin, the term is still used because Bitcoin exists in the protocol (just like Gold exists underground) it just hasn’t been “mined” yet. The Bitcoin protocol was designed such that only 21 million Bitcoin will ever exist and what the miners do is bring them out.

Let’s get a bit technical:

The Bitcoin network is kept secure by the mining operation and this is also how transactions are validated. New blocks are found in the blockchain every now and again and added to the chain. The miners get Bitcoins as a sort of reward for this since so much energy is expended during this process as not all attempts at finding a new block is successful.

This energy expended known as “Proof of work” ensures that bitcoins can’t be created out of thin air. They have to be earned and also, the network is kept secure in that if a hacker tries to change a transaction that already occurred, he has to undo all the work that has been done on the network till date. This is quite impossible and hence the network is kept secure.

Finding a new block is like making a random guess for a lucky number. Each time a miner attempts this, a small amount of energy is used up and if this attempt isn’t successful, that energy is wasted. Statistically, a miner succeeds every ten minutes.

All miners on the network are trying to guess what this mystery number is and only the successful miner gets the reward. The reward is currently 12.5 bitcoins and is halved every four years, the next one being 2020/21.

Common Cryptocurrencies

We have compiled a list of the most common cryptocurrencies in circulation to help your understanding of the crypto universe

Bitcoin (BTC)

Ethereum (ETH)

Litecoin (LTC)

Stellar Lumens (XLM)

SureRemit (RMT)

Dash

More About Crypto

Just some additional information you might find helpful.

Why Cryptocurrency?

How is the value of a cryptocurrency fixed?

What Can You Buy With Crypto?

Due to the extreme volatility of crypto and increasing transaction fees, some outlets that were very enthusiastic about accepting it as payment very early on have discontinued this. Nevertheless, there is still a variety of stores (online and offline) where you can spend your crypto most especially Bitcoin.

Crypto allows for fast and easy cross-border transactions.

You can pay for flights, book hotels with your crypto. Platforms that let you book flights and hotels with your crypto include CheapAir, Destinia and Bitcoin.travel.

Some gift card platforms accept bitcoin as payment. These include eGifter and Gyft. The gift cards can then be used to buy at any of the merchant locations worldwide (depending on the gift card chosen). You can also donate to your favorite causes as some of them now accept crypto payments.

Microsoft app store also accepts bitcoin for downloading games, movies and other app-related services.You can use your crypto to buy gold, furnish your home, buy pizza or even pay your school fees.

Safety Tips

As with traditional financial transactions, there are some risks involved. Let’s help you stay safe whilst navigating the crypto space.

Legality

In recent times, the crypto community has come under more intense scrutiny by governments and governing financial bodies.

Notwithstanding all the price movements and the rapid emergence of new tokens, there is a burgeoning interest in cryptocurrencies in several circles. As a result, new regulations are being passed to oversee the use and trade of digital currencies.

However, very few countries have gone as far to outrightly declare trading in crypto illegal within their borders, although its status as a commodity differs from country to country.

Countries which consider trade in cryptocurrency as illegal include: Algeria, Egypt, Morocco, Bolivia, Colombia, Ecuador, Saudi Arabia, Iran, Bangladesh, Pakistan, Nepal, China, Taiwan, Cambodia, and Indonesia.

Other countries and financial bodies have urged their citizens and the general public to exercise extreme caution in trading and/or investing in crypto.

In Nigeria, banks are prohibited from all bitcoin and other virtual currency transactions. A committee has been set up by the Central Bank to look into the adoption of blockchain technology.

Anonymity

Trading Crypto

Ready to acquire your own crypto? Let’s help you get started on this journey!

Buying Cryptocurrency

Now you know what cryptocurrency is! Excited? Well, the next step is to discover how to obtain some for yourself.

You can either buy crypto directly from other people who already have some or from an exchange. Paying for the crypto is very easy as you can pay cash or with your debit or credit card. Wiring the money to the seller is also an option or better still pay with other cryptocurrencies. Of course, all these options depend on your geographical location and where you are buying the crypto from.

Now that we know how to buy cryptocurrency, it is equally important to know how to store the cryptocurrency you are about to purchase.

The first step is to set up a wallet. A crypto wallet is just like your bank account where you can buy, sell, store and send your cryptocurrency to another wallet account. A wallet could be online: as part of a crypto exchange, or an independent wallet service provider, or offline: usually a hardware device or paper wallet. An offline wallet is more widely known as cold storage.

There are several wallet services to choose from and you should do some research to know the right type of wallet for your crypto as not all wallets support every cryptocurrency in circulation.

Now, you can decide whether you want to buy from an exchange like Busha or from another individual. Exchanges usually require some form of identification when you are setting up an account. This is as a result of KYC (know-your-client) regulations meant to curb fraudulent activities and keep everyone safe.

Most exchanges usually charge fees when you buy or sell bitcoin on their platform. These fees are negligible when compared with the fees banks and other traditional financial institutions charge for transactions.

These transactions are usually completed in minutes or sometimes even hours depending on the network.

Selling Your Cryptocurrency

Nowadays, it is just as easy to sell your crypto as it is to purchase it. All exchanges allow you to buy and sell. Your choice of the exchange to use depends on what type of holder you are: an institutional investor, a small investor or a trader.

Some exchanges are targeted at big-time institutional investors and traders while others cater to small investors. Every exchange has a different user interface and some offer secure storage services. Usually, a valid means of identification is required before any transaction can occur. If you do sell your crypto, we advise that you pay the tax on any profit made from the sale.

You can sell your crypto easily on Busha.

If you do not want to sell for your crypto for cash, you can also swap one cryptocurrency for another. Currently, on Busha you can swap your Bitcoin for Ethereum and vice versa.

It is also possible to sell your bitcoin directly to your family and friends who have a crypto wallet. You can get paid for the sale via direct deposits or wire transfer to your bank account.

Another option is to sell and collect cash payment though this is not a advisable especially when dealing with strangers.

Storing your cryptocurrency

Deciding which Cryptocurrency to buy

Crypto Wallets

Let’s take a look at the different types of wallets that are available.

Software Wallet

Online Wallet

Online wallets are cloud-based and are usually more convenient to use than software wallets. You can access your private keys from any device so long as you know your password so there’s no need to have backups. They usually have desktop and mobile apps which allow for ease of access to send or receive crypto.

The disadvantage of this is the lower security as you have to rely on the security protocol of the host and trust that they won’t close down or abscond with your crypto. Most online wallets are usually attached to exchanges and Busha is one of such.

If your computer is hacked and the hacker gets hold of your wallet and private keys, they can steal your crypto. Hence software wallets require a greater security precaution. Some common examples of software wallets are: Electrum, Exodus and Jaxx.

Some exchanges also offer offline storage options.

Cryptocurrency Unraveled