Bitcoin or often referred to as BTC, was created in 2009 by a person named Satoshi Nakamoto. Well that’s what he / she called himself / herself, whether this is a real name or not, no one really knows.
Bitcoin is a decentralized digital currency or cryptocurrency, internet money if you will. It relies on a system called blockchain. Blockchain is a technology that was developed to act as a digital ledger, where transactions of any cryptocurrency is logged chronologically and open to be viewed by anyone. This is one of the things that makes cryptocurrency so amazing, the fact that each and every transaction can be tracked and viewed by anyone. No banks, no ridiculous fees, complete transaction transparency and complete anonymity for users.
The blockchain is quite a complex technology and my knowledge is quite limited around the topic, but the gist of it is, it’s basically a huge database that keeps on expanding. As each transaction is made, it has to be confirmed on the blockchain. This is done by “miners”. Miners are computers that are setup to perform certain tasks on the blockchain that allows it to continue working. Anyone can setup a cryptocurrency miner. A couple of confirmations need to take place before any cryptocurrency transaction is confirmed on the blockchain and it takes quite a bit of resources (hardware power) to do this.
So why do people spend so much money on building miner computers and racking up their electricity bills to run these machines 24/7? Well, they get a small amount of cryptocurrency back for each transaction / block they mine.
Here’s a quick video that explains the process of transactions a bit more:
Cool, so hopefully the above gives you a better understanding of what bitcoin is and how it works. Next up, I’ll run through the quick and easy process of setting up a bitcoin wallet for yourself so you can buy some of this magic internet money!
Setting up a bitcoin wallet with Luno
Luno (previously known as bitX) is a platform used to buy bitcoin. There are loads of these platforms out there that make it extremely secure and easy to buy bitcoin, however, Luno is built for South Africans and they accept payments from all major banks.
Let’s get started!
1. ) Head over to Luno.com and click the sign up button. If you want an extra bit of bitcoin for free to start out with, click on this link to sign up: [Link].
Enter your email and a password, click sign up.
2.) Once you’ve signed up, verify your email
3.) Login on Luno and click on Buy
4.) Once you click buy, you’ll be prompted to verify your identity via mobile phone. Enter your number and enter the code you receive via SMS.
5.) Once you’ve verified your account. Click on Buy again, select your preferred bank and enter the amount of ZAR you want to use to buy Bitcoin
6.) You’ll then receive the banking details and your unique reference. Make sure to copy / paste the reference when making the payment (EFT). Once you’ve made the payment, you should have some Bitcoin in your account after a couple of minutes!
Congratulations! You now own some magic internet money! From here you can start trading Bitcoin and other cryptocurrencies. Personally, I just don’t have the time to spend on trading and am only buying cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Bitcoin Cash etc purely as an investment for the long haul.