In 2020, the term ‘Bitcoin’ became popular in Nigeria after the Naira currency devalued, leading many Nigerians to explore Bitcoin as a potentially stronger store of value.
Today, our world is abuzz with innovation, and one of its most captivating inventions is Bitcoin - a cryptographic digital asset widely known as cryptocurrency.
Naira’s dramatic devaluation in 2020 ignited widespread interest in Bitcoin among Nigerians, who were in search of a more reliable store of value.
This digital asset signifies a radical shift away from traditional government-issued currencies to one issued by solving cryptographic puzzles.
Despite the growing interest, many are still uncertain about what Bitcoin is and how it works. If this is you, then you’re on the right track!
This article serves as an eye-opener to the topic and will deepen your understanding of the revolutionary technology behind Bitcoin.
You will learn more about the digital currency, it history, how it works, how to get it, and what it can be used for in Nigeria.
What is Bitcoin?
In providing an answer to this question, let’s make it as simple as possible:
Imagine a world where money isn’t controlled by banks or governments but by a network of computers owned by regular people like you and me. Bitcoin for you, is like digital gold that lives on the internet. It’s a type of money called cryptocurrency because it uses special math puzzles, called cryptography to keep everything secure.
How Bitcoin Works
Unlike regular money, there’s no central place like a bank that looks after Bitcoin. It’s decentralized, which means it’s run by lots of different computers all over the world. Bitcoin is made by mining. People use powerful computers to solve complex math problems, and when they solve one, they get Bitcoin as a reward. This process is called mining.
It’s considered safe and secure because every Bitcoin transaction is recorded in a public list called the blockchain. It’s like a giant ledger that everyone can see, but no one can cheat because changing one part would mess up all the records.
To use Bitcoin, you need a digital wallet. It’s an app where you can send, receive, and store your Bitcoin. Think of it as your virtual pocket for digital cash. So, Bitcoin is basically internet money that’s free from government control, is made through mining, and is kept safe by some really smart math. Cool, right?
This seamless integration of decentralization, mining, and blockchain technology ensures the security and reliability of Bitcoin transactions, making it a revolutionary form of digital currency.
To give it a general definition, Bitcoin is the first decentralized digital currency that enables faster and cost-effective transactions, with maintenance overseen by miners. This decentralized structure empowers Bitcoin transactions to occur directly between users on a peer-to-peer basis. It operates on blockchain technology, a distributed ledger system that records all transactions across a network of computers.
The Origin of Bitcoin
Bitcoin emerged in 2009, introduced by Satoshi Nakamoto – whether an individual or group remains unknown. The concept took root in August 2008 with the registration of Bitcoin.org, a collaborative effort between Nakamoto and Martti Malmi. That October, Nakamoto released the groundbreaking white paper, “Bitcoin: A Peer-to-Peer Electronic Cash System,” detailing a revolutionary decentralized currency.
The first Bitcoin block, the “genesis block,” was mined on January 3rd, 2009, potentially referencing a newspaper headline criticizing bank bailouts. Nakamoto continued contributing to the project until 2010, then vanished from the scene.
A key feature of Bitcoin is its decentralized nature. No single entity owns, runs, or controls it. Its value system is built upon a fixed supply of 21 million coins and halving mining rewards. The initial reward of 50 bitcoins per block is cut in half every 210,000 blocks. The most recent halving in 2024 reduced the reward to 3.125 bitcoins, with the next anticipated in 2028. Unlike traditional money, where governments can print more (leading to inflation), there’s a limited supply of Bitcoin. This makes each Bitcoin more valuable, which explains the increase in price over time, surpassing $64,000 and its growing acceptance in Nigeria’s evolving regulations.
How to mine Bitcoin
Bitcoin mining utilizes a Proof-of-Work (PoW) model, rewarding miners for their computational power used to validate transactions. This process, however, is energy-intensive, raising environmental concerns. There’s a growing trend within the Bitcoin mining industry to shift towards renewable energy sources to address this issue.
In its early days, you could mine Bitcoin competitively using a standard computer. However, as the network grew, so did competition. Today, your chances of successfully solving a hash on a home PC are extremely low. You’re up against a global network of miners with specialized hardware, known as ASICs, that can generate trillions of hashes per second.
While your computer can still technically mine Bitcoin, to be truly competitive, substantial investment in specialized hardware like the Avalon 7, Antminer S17, or Whatsminer M3OS is required.
Below is a picture of what the Whatsminer machine looks like:
How to use Bitcoin in Nigeria
If you’re not interested in mining Bitcoin, the most common way to acquire it is through a cryptocurrency exchange. While the high price might make purchasing a whole Bitcoin difficult, exchanges allow you to buy smaller fractions using Naira. Platforms like Bitnob offer straightforward ways to set up an account and purchase Bitcoin using your bank account.
To send and receive Bitcoin, you’ll need a digital wallet. Popular options include online providers like Blockchain.com or secure exchanges like Bybit and KuCoin. Setting up a wallet often involves submitting your Identity document for account verification. Once your wallet is ready, you can purchase Bitcoin – typically with USD or other fiat currencies – and then send it to anyone with a compatible wallet address using the Bitcoin network. Be aware of transaction fees, as these are necessary to compensate the miners who validate transactions.
It’s essential to protect your wallet’s private key, especially if you’re using a self-hosted (hardware or hot) wallet. This key grants access to your Bitcoin, so store it safely. The public key is where you can receive payments. To ensure maximum security, consider using a hardware wallet.
Bitcoin’s uses extend beyond its origins as a peer-to-peer payment system. Its growing value and advancements in blockchain technology have expanded its potential. Here are some common ways to use Bitcoin:
Payment: Many merchants now accept Bitcoin for goods and services, both online and in physical stores. Look for signs indicating acceptance or check if online businesses include Bitcoin as a payment option.
Investing and Speculating: Bitcoin’s price fluctuations attract both investors seeking long-term gains and traders aiming for short-term profits. Be aware of the volatility – prices can swing dramatically based on news and market sentiment.
What’s the state of Bitcoin regulation in Nigeria?
Nigeria’s stance on Bitcoin has evolved over time, suggesting a cautious embrace of the technology. Initially, the Central Bank of Nigeria (CBN) prohibited financial institutions from dealing in crypto. However, a shift occurred in May 2023 when a 10% tax on cryptocurrency sales signalled recognition of the sector. That same month, a national blockchain policy was introduced, aiming to foster a blockchain-powered economy.
Further progress came in January 2024 when the CBN released guidelines allowing banks to service crypto firms (though not directly hold or trade crypto themselves). Despite earlier restrictions, crypto transactions in Nigeria demonstrate a thriving peer-to-peer market.
Bitcoin FAQs
Where can I use Bitcoin in Nigeria?
Finding places to spend Bitcoin in Nigeria can be tricky. While websites like BTCMap list businesses that supposedly accept Bitcoin, overall adoption by local merchants remains low. Cash is still the preferred payment method for most everyday purchases.
The focus in Nigeria right now is primarily on Bitcoin as an investment. As awareness and adoption grow, this may change in the future, and more local stores might start accepting Bitcoin.
Who created Bitcoin?
Bitcoin was created by an individual or group of people under the pseudonym Satoshi Nakamoto. The true identity of Satoshi Nakamoto remains unknown.
Is Bitcoin a good investment for Nigerians?
Bitcoin is known for its price volatility, which can result in high returns as well as significant losses. Whether Bitcoin is a good investment for you depends on your financial situation, investment goals, and risk tolerance. It’s advisable to consult with a financial expert before investing in Bitcoin, especially considering the economic dynamics in Nigeria.
How much is 1 BTC in Naira?
According to Monierate, 1 Bitcoin (BTC) is equal to approximately ₦76,290,427.3914 today.
Is Bitcoin real money in Nigeria?
Bitcoin is not considered legal tender in Nigeria, but it is widely used as a store of value and for transactions online. It has become a popular means of exchange and investment, especially among the tech-savvy population.
What’s the Bitcoin transaction fee for sending $1,000 in Nigeria?
Bitcoin transaction fees are not based on the amount being sent but on the size of the transaction in kilobytes and the congestion of the network at the time of the transaction. The fee is paid to miners who validate and include your transaction in the blockchain.
Why do transaction fees exist?
Transaction fees exist to compensate miners for the computing power and energy they expend to validate transactions and secure the Bitcoin network. These fees help maintain the integrity and continuous operation of the blockchain.
Key Takeaways
Bitcoin, the first and most widely known cryptocurrency, stands as a revolutionary decentralized payment system. Its secure design, based on complex cryptography and a public ledger, empowers individuals to transfer value globally without the need for traditional financial intermediaries. With its limited supply of 21 million coins and growing adoption, Bitcoin represents a potential store of value beyond the reach of any single government.
Here are some of Bitcoin’s most compelling attributes:
Scarcity: Ensures long-term value and protects against inflation
Decentralized: No single entity controls the network
Accessibility: Open for use 24/7/365, worldwide
Transparency: Transactions are verifiable
Peer-to-Peer: Eliminates the need for banks or middlemen
Permissionless & Censorship-Resistant: Promotes financial freedom and autonomy
Divisible: Easily broken into smaller units (satoshis)
Secure: Protected by a vast network of miners
Irreversible Transactions: Promotes confidence in payments
While the underlying technology of Bitcoin is complex, investing in it has become increasingly accessible through cryptocurrency exchanges. As with any investment, particularly one as dynamic as Bitcoin, it’s crucial for enthusiasts to carefully assess their risk tolerance and determine if this digital asset aligns with their financial goals before committing.