Unlocking the blockchain – An introduction to bitcoin and distributed ledger technology

While not many vendors in South Africa accepts cryptocurrency as a valid payment method, Bitcoin has started taking over the entire world. Bitcoin is an innovative payment network and a new kind of money. Invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. Published in 2008, and was released as open-source software in 2009.

And although the Rand continuous to weaken, Bitcoin and cryptocurrency is growing fast, with currency values climbing in 2017. Bitcoin enjoyed an increase in price of 63% during the last month and trade volumes almost ten folded on our local exchanges.

In light of this, Sabinet hosted the annual Organisation of South African Law Libraries (OSALL) breakfast workshop in Centurion that focused on this very topical matter and the impact thereof.

Norton Rose Fulbright’ Kerri Crawford and Rakhee Bhikha, based in Johannesburg, shared mind-boggling insights with law librarians and other professionals from the legal industry.

One might be familiar with cryptocurrencies, digital currencies or virtual currencies, but they all mean the same thing. Bitcoins hold many benefits in which they are readily available and the cost of transactions are very low. None of these however are linked to a bank or country.

Bitcoins are preferred by many online patrons, because of its real-time processing, easy accessible and most likely the anonymity factor to it. These days, you can purchase almost anything using bitcoins form coffee to houses, and you can use it in any country.

But the real question everyone is asking is how can something so anonymous and acquired so easily over the internet be legal? Every day we hear about how people are using their hard-earned Rands and buying bitcoins – whether it is for an investment or the thrill of buying internet currency and watching it grow by the day, sometimes even doubling overnight. Fact is Bitcoins are changing the financial industry the same way web changed the publishing industry.

Bitcoins are ‘mined’, using computing power in a distributed network. This network also processes transactions made with the virtual currency, effectively making bitcoin its own payment network.

Only 21 million bitcoins can ever be created by miners. However, these coins can be divided into smaller parts (the smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi’, after the founder of bitcoin).