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What is Bitcoin?

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People buy Bitcoin for all sorts of different reasons. It’s a store of value, a transactional medium, and an idea that some claim could change the future of economics entirely.



Most notably, it’s not a real, physical thing, but an entirely digital entity (no matter what the header image may suggest) with no middle-man controlling its use. To put it simply, Bitcoin is a cryptocurrency.

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A crypto-what?

sec arisebank initial coin offering ether cryptocurrency

A cryptocurrency, of which Bitcoin was the first and still the foremost, is an entirely digital form of currency. Think of it like the way you operate your online bank account or use credit-cards. You never have to physically have that money to own it or use it. The same is true with Bitcoin — it’s just numbers in a wallet — but you can do a lot with them.

Bitcoin sits atop the public ledger that is blockchain technology, and is gradually created by a practice called “mining.” Although the specifics of mining go beyond the scope of this article (this one explains it in more detail) in effect, powerful computers run incredibly complicated mathematical formulas to provide the verification for Bitcoin transactions, and at the same time create new Bitcoins. The difficulty of this formula creates scarcity.

There’s also a hard limit on how much can ever be produced — 21 million Bitcoins, to be specific. While we’re a long way to that happening, that limit makes Bitcoin quite different from the dollars and pounds we are so used to. Many successors to Bitcoin have decided not to use a hard-coded limit, so this trait is somewhat unique.

Independent, for better and for worse

Bitcoin differs from traditional currencies, like the U.S. dollar or British pound, in an important way — it isn’t backed by any central organization, or a physical item, like gold.

The value of a single Bitcoin is based entirely on what people consider it to be worth. Much of that is related to what you can use it for and the quantity of product or service you receive in return. Of course, money’s value has long been based largely on a perception of worth. That’s why economic panics can cause a run on a bank, or inflation can go out of control. Yet there’s always been some underlying guarantor — usually a government — offering the promise of stability.

Bitcoin doesn’t have that. It was created independent of any government, and remains independent. Its value is dictated entirely by the market for it. It has soared to incredible heights, but has also experienced huge price shocks, and there’s been many accusations of insider trading, price manipulation, and other dubious tactics. Governments have strict measures to prevent these problems in their currency — though they don’t always work — but Bitcoin, being independent, can’t implement such checks, and attempts at regulation are largely doomed to fail.

Bitcoin as a transactional medium

what is bitcoin

One of the core purposes of Bitcoin, from its original creation, was as a transactional medium. That is, it’s used in place of traditional currency. When stored in a digital wallet like Coinbase, it can be sent to another wallet anywhere in the world to pay for goods or services, and over the years it’s been used for just that.

For those who don’t have the time or computational resources to mine Bitcoin themselves — today you would need to spend thousands on hardware to hope for even a modicum return on your investment — they can buy it. There are a number of ways to do so, but typically it involves sending an amount of traditional currency to a person who owns Bitcoin, who in turn sends the relevant amount of currency to your wallet.

One of the most highly publicized ways Bitcoin has been used for transactions over the years has been for darknet drug sales. Thanks to the anonymous nature of the cryptocurrency, it’s been utilized to pay for illicit substances and other items over Tor-accessible websites like the infamous Silkroad. It’s also facilitated the rise in ransomware.

That’s not to say that Bitcoin is used exclusively for illicit transactions, though. Indeed, it can also be used to give to charities, pay for gift cards, pizzas and airline travel, and it’s even found usage as a day-to-day way of paying for goods in countries with terribly collapsed or inflated currencies of their own.

Bitcoin as a store of value

bitcoin stock

Back when Bitcoin was first created, individual ‘coins’ had no intrinsic value. What they were worth was negotiated, with one person once offering 10,000 Bitcoins for a couple of pizzas. Over time, though, as more uses for the currency have been created and it’s grown more popular, Bitcoin’s value has risen in turn. While a single Bitcoin was worth pennies in 2010, today it’s worth more than $6,000, having peaked at more than $19,000 at the end of 2017.

For this reason, over the past few years and most notably in 2017, people have begun to see Bitcoin as a store of value. Although extremely volatile compared to more typical systems like stocks, shares, or gold, Bitcoin has become a popular way for people to invest their money and for some, it’s paid dividends. Those who purchased Bitcoin at the start of 2017 saw a near 20-fold return on their investment throughout it, leading some to suggest that Bitcoin could be worth seven figures by 2020.

It is important to note that this extreme optimism has given rise to a lot of uninformed investment in what is still a relatively unproven digital medium. It is far closer to gambling in terms of its potential for financial gain and loss, and there have been many sad stories of people losing huge sums during big downturns in the currency’s value.

The lasting legacy

There are many people who have a lot to say about Bitcoin, both bad and good. Some see it as a way to make a quick buck as it jumps up and down in value, while others see it as an entirely new economic model. It’s also possible that Bitcoin itself, as impactful as it has been, will be most successful as the progenitor of underlying technologies like the blockchain and newer alt-coins like Ethereum.

The future of Bitcoin is far from guaranteed, but its impact on the world of finances, online transactions, and on many people’s bank balances, cannot be denied. It’s been a force for good, for bad, and everything in between — and it will be well remembered, even if it doesn’t reach the heady heights that so many predict.

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Business

Business persons in Tanzania pleads for Scrapping of Nuisance Taxes

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A Taxes
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Business persons in Kilimanjaro Region have pleaded with the government to scrap nuisance taxes and charges saying they are crippling their businesses and undermining growth.

Speaking here during a training to public officials and businesspersons from all districts of Kilimanjaro Region, the businessmen said there multitude of charges which have led to closure of many businesses in the region.



The training is organised by the regional Chamber of Commerce, Industry and Agriculture (TCCIA) and Best Dialogue. Mr Christopher Shayo ‘Chrisburger’ who runs restaurants in the region said there were between 18 to 20 taxes to new entrants in business that make it difficult for newcomers to be able to run businesses, while others more are charged to going-on businesses.

Mr Shayo said the difficult periods are during auditing, whereby apart from being required to pay respective taxes, traders are slapped with hefty fines. He said that he was optimistic the situation would change as he sees the government noticing some improper issues and seeking to address the them.

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 The Moshi based businessman said the Fire and Rescue Services and Occupational Safety and Health Authority (OSHA) officers charge more than a business licence fee. TCCIA Vice Chairman (Trade), Mr Dismas Dede pleaded with the government to make early payments to suppliers and constactors as it is making it difficult for them to operate as well as paying salaries and procurement of other items.

He said it was sad that everything was referred to Dar es Salaam for action and it takes too long to pay. Mr Dede also called upon Tanzania Revenue Authority (TRA) to be closer and friendlier to businesspersons instead of the current situation where the two sides look at each other as if they are enemies

Officiating the training, Kilimanjaro Regional Commissioner (RC), Ms Anna Mghwira thanked TCCIA and Best Dialogue for facilitating the training, saying that it was necessary when the government is taking all efforts toimprove the economy and make industrialisation real.

In a speech read by Same District Commissioner, Ms Rosemary Senyamule, the RC said participants have to understand the investment climate in the region, challenges and how to solve them; get the knowledge on how to manage and develop dialogue between public and private sector and how to bring together private and public sectors and work in friendly environment.

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-AllAfricaNews

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Ghana disclosed plans to get 27 Defunct SOEs off Nation’s Books

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A Deputy Minister of Finance, Mrs Abena Osei-Asare, has indicated that moves were underway to clear defunct State Owned Enterprises (SOEs) off government’s books.

Mrs Osei-Asare, MP, Atiwa East, said that in this vein, government, through the Ministry of Finance will soon present to Parliament an audited report of the SOEs as part of the approval processes needed to write them off.



Appearing before Parliament’s Public Accounts Committee (PAC) in Accra yesterday to answer questions on the 2016 Auditor General’s report on Consolidated Funds, she revealed that the Finance Ministry had secured the services of England based accounting firm, Deloitte and Touche, to audit and find out the values of the defunct companies and also study their equity stakes.

“We have received the consultant’s report and we will review it. The Ministry of Finance will come to Parliament to seek approval to clear these defunct companies and also reduce loan balances they have with government” she told the James Klutse Avedzi-chaired committee.

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Per the 2016 Auditor General’s report, sighted by the Ghanaian Times, 27 erstwhile SOEs and Joint Venture companies which were divested or officially liquidated have been included in the Investment of the state as at December 31, 2016.

The companies are the National Savings and Credit Bank, Ashanti Cocoa Project, State Construction Corporation, State Fishing Corporation, New India Assurance, Zenith Assurance, Ghana Livestock Company, Ejura Farms and Bridatrust International.

Others are Oppong Mansi Integrated Iron and Steel, Ghana Industrial Holding Corporation, State Hotels Corporation, Rural Banks, Ghana National Trading Corporation, Bakeley Steel Ltd, Kumasi Brewery, Home Finance Company and Ghana International Airways.

The rest are the Bonsa Tyre Company, Ghana Tobacco Company, Ghana Bottling Company, West Africa Mills, Crystal Oil Mills, Neoplan Ghana Limited, Ghana Cargo Handling, Ghana Merchant Company and Ghana Sugar Estate.

According to the report, Public Debt and Investment (PDI) and Public Investment Divisions of the Ministry of Finance and the Controller and Accountant Generals Department (CAGD) respectively compiled the statements making up Governments’ Investments which forms part of the financial assets in the Consolidated Fund.

The report added that sampled review of 35 transactions disclosed that investments in four SOEs and three other companies, partly owned by the Government of Ghana, were omitted from the investment schedule.

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-GhanaianTimes

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