As Kenyans, we all love to play what many mistakenly call ‘poker’. It is a nameless popular card game in which we all learn phrases like “Niko kadi” and what usually follows soon after, “Msibadilishe wacha ikuje tu ivo”
Niko Kadi! What Kenyans’ favourite card game and Bitcoin have in common
Shouting "Niko Kadi!" is such an amazing feeling until your friend adds “Msibadilishe wacha ikuje tu ivo”. Here is a fun way to understand cryptocurrencies.
Imagine you’re playing the competitive game of cards with some friends, but unfortunately, you all left your cash in the car.
There’s no money on the table, so a few of you get out some notebooks, and start writing
down who bets how much, who wins, and who loses.
Because you don’t completely trust each other, everyone keeps their notes separately.
And at the end of every hand, you all compare what you’ve written down. That way, if someone makes a mistake, or tries to cheat and snag some extra money for themselves, that discrepancy is caught.
Where am I going with this story you might ask? That is how easy it is to understand how Bitcoin works.
One Bitcoin is currently worth, well above Sh7 million on Yellow Card, a cryptocurrency exchange that offers the safest way to buy and sell bitcoin in Kenya and over 10 other countries.
Just 12 months ago, the value was just a little over Sh1 million, representing a growth of 600%, and just a few years ago in 2016, the value was about Sh100,000.
Ever since it was launched, many people in the world have become billionaires for investing in cryptocurrencies.
Sounds surprising, yes? Do you wish you had known or paid more attention to crypto earlier?
Lucky for you, you don’t need millions to start trading Bitcoin. Yellow Card has a guide on how to start trading in just 7 easy steps.
Back to our game of cards. After a couple of rounds, you might fill up a page of your notebook with info about who won what game and who owes whom.
You can think of every page as a block of transactions and after several more games, the blocks of transactions form a chain.
From this, we get the word blockchain which contains a record or ledger of all bitcoin transactions.
So when you send someone bitcoin, it’s not like you’re sending them a bunch of files.
Instead, you’re basically writing the exchange down on that big ledger – something like,
“Denis sends Micheal 5 bitcoins.”
Because there are millions of people keeping track of the same thing, it makes sure all transactions are accurate.
To stick with our card game analogy, think of the bitcoin network as a really huge card game table with millions of players.
Some are just exchanging money, but lots of volunteers are also keeping a record of the ledgers.
So when you want to send or receive money, you have to announce it to everyone at the table, so the people keeping track can update their ledgers.
So for every transaction, you’re announcing a couple of things; your account number, the account number of the person you’re sending bitcoins to, and how many bitcoins you want to send.
And all of the users who are keeping copies of the blockchain will add your transaction to the current block.
If it is that easy, what’s stopping Michael from pretending he’s me and just sending himself all of my bitcoins?
How to Trade Bitcoins
When you create an account on Yellow Card, that account is linked to two unique keys: a private key, and a public key.
In this case, the private key can take some data and basically mark it, also known as signing it, so that other people can verify those signatures later if they want.
So let’s say I want to send a message to the network that says, “Denis sends 3 bitcoins to Michael.”
I sign that message using my private key, which only I have access to, and nobody else can replicate.
Then, I send that signed message out to the bitcoin network, and everyone can use my public key to make sure my signature checks out.
That way, everyone keeping track of all the bitcoin trading knows to add my transaction to their copy of the blockchain.
In other words, the transaction is recorded by millions of ledgers across the world and Michael would have to tamper with so many of the records that it is next to impossible.
Unlike a handwritten signature, or a credit card number, this proof of identity isn’t something that can be faked by a scam artist.
What about the millions of ledger keepers who spend their money on special computers built to maintain the blockchain? Is it just community service?
Well, bitcoin actually has a built-in system to reward them. Every time they successfully participate in a transaction they get rewarded in Bitcoins.
The 2021 Global Crypto Adoption Index by Chainalysis ranked Kenya the top country in the world in terms of peer to peer exchange trade, well ahead of the other 154 countries surveyed.
This is proof that Kenyans are leading the world when it comes to using digital currency platforms.
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