I have attempted to highlight some of the key points of a wonderfully delivered lecture in the ongoing master class on decentralized finance organised by Binance Africa. The panelist who gave an introduction to Bitcoin and Crypto currency was George Mwakisha. He simplified the concepts for newbies to the crypto space to easily grasp. Here are the notes I was able to take down during the class. Do spare time to glance through and I am sure you will not reget doing so. The masterclass continues on Saturday and Sunday, 10th and 11th October by 4 p.m. UTC (5 p.m. WAT) via Zoom.
Some important dates & events in the history of Bitcoin and other crypto currencies
The concept of Blockchain was conceived around 1979.
Satoshi Nakamoto created Bitcoin in 2008.
The first Bitcoin transaction took place in 2009.
May 22, 2010 an online Bitcoin purchase was done by a man called Lazlo. He bought 2 pizzas for 10,000 Bitcoins (Worth about $ 110,000,000 goingby the current price of 1 BTC).
October 16, 2010 BTC purchased and traded as currency.
By 2011, 1 BTC = $ 1.
2012 , other crypto currencies started popping up.
2014 Bitcoin experienced it's biggest volatility but the market stabilised afterwards.
2016 This year was characterised by the rise of ICO.
2017 The year of ICO boom.
2018 Market correction.
2019 Shift from ICO to IEO.
2020 The year of decentralisation finance (DEFI).
Bitcoin is the first decentralised electronic peer to peer payment network without intermediary or central banks. Nodes are responsible for maintaining the block chain.Verification and approval of transactions on a block chain is done by miners.
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Characteristics of FIAT and BTC which highlight their differences F
FIAT
Regularmoney issued by the government.C
Country specific and controlled by the issuing government via the central bank.
Unlimited supply leading to devaluation in the long run.
BITCOIN
A digital asset that exists in a code and its supply is limited.
Intangible as it exists in digital form.
Decentralised.
Can be used globally, not country bound or specific.
Transactions are performed faster and can be used as many times as the user desires
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Block Chain & Smart Contracts
Block chain is a distributed ledger technology that allows movement of digital assets from between parties without the need for central parties or middle men. It also facilitates P2P transactions. See the BBC video via YouTube below which also explains block chain using illustrations that are easy to relate to.
Bitcoin is the first digital currency to be created on block chain technology
It is fully decentralised and secured with cryptography
Smart contract was coined by Nick Szabo in 1996. It was brought about by the need to entrepreneurize the block chain technology to facilitate exchange of value or assets besides money. This idea aimed at covering the exchange of other asets like land, physical resources e.t.c.
In simple terms a smart contract is an automated and computerized legal contract on a block chain. It is faster, cheaper and more secure. Smart contracts are self executing contracts with terms of agreement between the buyer and seller being directly written in lines of code.
Advantages of Bitcoin and crypto currency
The owner truly controls his or her money.
Governments cannot erode your wealth by printing money backed debt.
You have various options to store it such as paper, thumb drive or mobile device.
Can be sent to anyone and at anytime.
Lower transaction costs and times
Shortfalls/Deficiencies
Volatility i.e. price fluctuations which offers an opportunity for trading.
Capacity/scaling issues due to rigidity in the network especially Bitcoin block chain.
Mining which has high energy consumption. Other cryptos are faster and cheaper transacting due to different mining mechanism.
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Security and other related issues with crypto currency
Crypto currency transactions are secured via cryptography. As stated earlier , block chain is a distributed ledger with transactions bundled in blocks. Ledgers are synchronised through consensus mechanisms. The block chain has an anti temper mechanism such that information is verified and immutable i.e. cannot be tampered with.
The consensus algorithm is a way of agreeing how to verify transactions on a block chain. BTC uses proof of work where verifying transactions involves solving a specific complex problem or challenge within a short period of time. The one who is fastest at successfully verifying a transaction is awarded the Bitcoin.
Keeping your crypto safe
There are various options available for storing your crypto such as :
Online wallet which is internet based
Mobile wallet which is an app based wallet installed on mobile devices. For mobile wallets, seed phrases and private keys are very important for wallet recovery or compromise. Hence they should be stored offline.
Desktop wallet which is also app based
Hardware wallet which is a USB drive that is offline
Paper wallet
Staying Safe
Back up your private keys or seed phrases offline.
Do not share your passwords with anyone.
Always use 2FA in your exchange account. If you haven't done so it will be wise to activate asap.
Use strong passwords which should comprise at least 8 characters with a mixture of letters ,numbers and special characters.
Avoid clicking random links online so as not to fall victim to phishing.
If you're not trading store your cryptos off exchange in a wallet
How to avoid scams
Invest in knowledge.
Learn to trade in cryptos.
Avoid anything with promised of daily, weekly comes in the name of Bitcoin-HYIP (high yielding investment platforms)
Be in the right forums.
I hope you learnt a thing or two from this post. Remember one one of the best things you can invest in is knowledge acquisition. It is a priceless investment.
Shukran
Danke
Merci
Gracias
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