The fear of the unknown seems to have gripped the general public about Bitcoin, the (new) digital currency that has taken the business world by storm and appears to redefine the financial stage.
In the face of this ‘currencyphobia’ and unbearable lack of information, Sifa News speaks to Shireen Ramjoo, a South African-born expert, who rejects the allegations that bitcoin is yet another field run by those ‘hiding on computers in the dark’.
Ramjoo is the founder and CEO of Liquid Crypto-Money, based in Johannesburg. This is the first part of the article.
Sifa News: Crypto-currency. These words sound scary and sophisticated. Explain these and tell us why we should not be scared of this new revolution.
Shireen Ramjoo: Crypto comes from the word cryptography which just means the art of writing or solving codes. As digital currencies are not printed like traditional currencies, they are created and housed digitally.
Bitcoin is a software and crypto-currencies are softwares designed to solve algorithms that create the currency. It has a high level of inscription techniques that makes it very safe if used properly. Currency means the same as our traditional currencies. They work the same way too.
You can choose to use Bitcoin in a good way just as you use normal flat currency or choose to use it for dark dealings. It is a personal choice.
Sifa News: Are there some regulations about Bitcoin?
Shireen Ramjoo: As Bitcoin is not owned by any governments (decentralised currency), it in itself does not have any specific regulations. However, as countries start regulating it, they create regulatory frameworks that crypto-currencies should operate under. Currently bitcoin is regulated in Germany, Switzerland, Japan, Australia, Philippines, South Korea and Hong-Kong. There are a few other countries worldwide that are looking to regulate bitcoin by 2018.
Sifa News: The word blockchain is being heard a lot since the dawn of this digital currency. What does it mean?
Shireen Ramjoo: Blockchain is the technology that Bitcoin is built on. It is dubbed to be the second generation of the internet. Just as e-mail was the first application of the internet, Bitcoin is the first application of blockchain technology. As the internet did not stop at e-mail, Blockchain is set to revolutionise many other sectors. Blockchain is an open source public ledger that records transactions instantaneously without the need of a middleman.
It is a record of blocks of data aligned in a linear chain. The major factor about the blockchain is that data cannot be tampered with once recorded. This means that fraud in such a system cannot happen.
Companies are starting to use the blockchain technology for industries such as supply chain management, identity management, law, entertainment, property management.
In essence, any industry that has a middleman can now use smart contracts on a blockchain that will enforce and manage a contract, without using a traditional third party for this, at a much cheaper rate.
Sifa News: Can you provide the beginners with some of education to guide them through all the steps without dumbing down?
Shireen Ramjoo: You need to open a ‘Bitcoin wallet’. A Bitcoin wallet is equivalent to opening a normal bank/money account. The same principle applies as if you open a dollar account you would need to add dollars to it, or a pound account that needs you to add pounds. A Bitcoin Wallet needs you to fund account with Bitcoin. Opening a Bitcoin wallet is as easy as opening an e-mail account online.
Bitcoin is bought as any other worldwide currency. We use exchanges that sell crypto-currencies to buy.
You need to look for reputable crypto-currency exchanges in your country to buy.
Once you buy from an exchange, you should make sure you send your bitcoins to your personal Bitcoin Wallet. You have your own private keys if you have your own wallet. If you leave your bitcoin in an exchange that you buy from, remember it is the exchange that will have the private keys to your wallet. If anything happens to the exchange, your bitcoin will be at risk.
Once you have Bitcoin, secure your account under your profile security settings. Make sure you secure with Google Authenticator as well. Remember any online account is prone to hacking, just the same way our traditional accounts are also prone to hacking. It is your own responsibility to secure your accounts and keep your own money safe. You now have option to keep your bitcoin offline, using a ledger device. Note that it won’t be prone to any online attacks, but if you lose this device, you will lose all your bitcoin.
You can sell your bitcoin back to local exchanges, and they can deposit money into your local bank account if you need your money. Or you can get a VISA/Mastercard that will allow you to transact normally from swiping at your local shop, filling petrol and withdrawing physical cash at any local ATM in country. This option usually requires usual Financial Intelligence Centre Act (FICA) regulations.
(To be continued).
Photo: Shireen Ramjoo, founder and CEO of Liquid Crypto-Money, based in Johannesburg. Credit: FB