What Is Bitcoin?
This is a question that is very hard to answer. There is a lot of material to cover here, its so huge that Andreas M.Antonopouos has written a whole book on what it exactly is. Which recently had a second publication to it. The book is titled Mastering Bitcoin and is highly recommended to be read to understand in depth of what it is and what are its implications.
Some of the context that I write here will be taken from that plus combined with our own understanding of what bitcoin is and why it matters to Pakistan.
Bitcoin is a collections of concepts and technologies, which forms the basis of money ecosystems. In addition, its a system that allows boarder-less transfer of value. While most people call bitcoin a currency or money, its much more than that. Its a technology that forms the basis of transparency, verification and accountability over a trust-less network. This is a lot to take in initially, but as you will start to have the understanding of btc(bitcoin) you will realize its importance as a technology.
Right now the bitcoin network is the biggest network in the world its more then 20 times the combined power of worlds top 500 super computers and increasing on a daily basis. This in turn makes it the most secure network in the world.
How Bitcoin works?
This is actually very interesting. Now a days there is lot of buzz in the market about “blockchain”, well this is a concept that Satoshi Nakamoto deployed through his white paper in 2008 which is now known as bitcoin.
He designed a software which was open source that would keep a public record of all transactions on a ledger. What that means is that once a transaction is written to the ledger there is no way to re-write it. The ingenuity of this was defined in the white paper which published by Satoshi in a system called POW or proof of work.
The idea was to let people provide hashing power to solve a mathematical formula that became more difficult with time and speed put towards it. This way whoever solved the formula first would be rewarded in this case with bitcoin and then write that transactions to the blockcahin. This bitcoin blockchain would then be replicated by all servers (called nodes) who ran a copy of the bitcoin wallet. This formed the basis of the first truly decentralized fair ledger which could be verified.
Unlike traditional currencies, bitcoins are virtual, while they can be printed on paper wallets they are non existent physically. However, bitcoins can be mathematically proven to exist. This is a concept that is very important to grasp. So to understand this you can move with your bitcoins in your pocket.
So if you reside in Pakistan that means the bitcoins are physically present here in a virtual setting in your wallet, If you lose this wallet they are gone forever. This can however be setup with online wallets but that bring the risks of the site (wallet site being hacked, we will get into details about securing bitcoins in another blog). For now its important that you realize that bitcoin can be kept in online wallets, offline wallets, multi-sig wallets or paper wallets. There might be other means but these are the most common ones.
How to buy or sell bitcoin in Pakistan
This is a common question and asked many times. There are multiple ways to buy and sell bitcoins in Pakistan. First we must understand that bitcoin is a decentralized commodity hence its price is dependent on the supply and demand.
What this means is that if you try to buy bitcoin and there is only one seller with bitcoin available right now in Pakistan he can demand whatever he wants and if you still need it you will have to pay the price he is willing to offer. At the same time there can be a seller who is looking to sell as he needs fiat like PKR for some need, but if there is only one buyer then he has to sell it at whatever the price the the buyer is willing to buy at.
So in this sort of way it works like an open market similar to that of gold where supply and demand usually depicts the rates of bitcoin. In Pakistan bitcoin or btc is very new hence the bitcoin to PKR price varies from where you buy it. Currently there are 5 methods to buy btc or sell btc in Pakistan.
You can use an order-book based trading platform urdubit, localbitcoins, remitano, MyCelium wallet or bitcoinpk through a credit card (the cost of using bitcoinpk.com with a credit card is not recommended as the price is too high due to charge-back risk). This is basically how the price of bitcoin is set. I will be covering each one individually to convey the proper understanding of them and how to use them in the future.