Bitcoins Part One: What is cryptocurrency?
Bitcoin is the current buzzword of the financial world, with some news stories lauding it as “the future of currency” and other reporting on several recent hacking instances that have destabilised some of the biggest bitcoin exchanges. It’s the world’s first cryptocurrency (also referred to as digital currency), but what does that mean?
Bitcoin was introduced in 2009 by developer Satoshi Nakamoto (as a pseudonym, this could refer to one person or a group of people). It uses peer-to-peer (P2P) technology which, in short, means there is no middle man, no central bank, no government regulation, and an inexpensive transfer fee when compared to current money transfer options. Bitcoin from the buyer’s electronic wallet goes directly into the seller’s electronic wallet. It can also be traded for cash, as long as the country in which you are trading recognises Bitcoin as a legitimate currency.
Read related articles on Business Review Australia:
One of the largest appeals of the bitcoin is the ease of international use. Because the bitcoin belongs to the world and not one specific nation, it crosses borders seamlessly. This leads to less time for transactions and no hoops like exchange rates and government regulations through which to jump.
“Mining” for bitcoin
The bitcoin mining process is probably the most confusing element to understand for those of us who are not professional coders. It’s called “mining” because those who do it are the ones who get the new bitcoins, and because it is a finite resource – it’s thought that it will cap off at around 21 million bitcoins sometime during the first half of this century. The code to start mining is open-source, so anyone can start mining for bitcoins, but that doesn’t mean everyone will have the hardware, patience or ability to do so. The following information is simplified, so that even the most helpless of computer users (like me) can hopefully understand.
A few things are necessary to get started. A bitcoin miner must have a bitcoin wallet (it’s exactly what you think), which can be downloaded for whatever operating system in use. A backup of the bitcoin wallet isn’t necessary, but suggested, as if your computer crashes and you don’t have a copy, your bitcoin will disappear into cyberspace forever. The open-source code is also required.
A computer mines for bitcoins by solving increasingly difficult algorithms. When the bitcoin currency and code was introduced, it was easier to mine for bitcoins because the algorithms were simpler, meaning less advanced machines could solve them. Introduction of new bitcoins has since levelled out, because the longer the algorithm, the longer it takes to solve. Now, it is extremely inefficient for one person to try and mine for bitcoins – results are much better in a pool. This allows several machines to be used to solve one algorithm, meaning it will take less time, and offer more regular (though less lucrative) payouts.
The algorithm itself goes towards building and maintaining, in essence, a giant public ledger that contains the record of every bitcoin transaction ever. The miner’s machines check to make sure when a transaction occurs, the sender isn’t transferring money he or she doesn’t have. For this service, and for adding layers of computational work to the ledger so that it cannot get hacked, miners are awarded bitcoins.
The final instalment in this two-part series about the bitcoin will discuss which companies currently use the currency, which countries ban it, and the pros and cons of a global, unregulated currency.
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.