A while ago, I started getting into Bitcoin. This was when it was starting to really break into the mainstream. And while getting into it, I had to actively stop kicking myself for being naïve back in 2011 when a friend tried to introduce me to Bitcoin. Regardless, there was only one question I had in mind: How can I get Bitcoin in Brunei? Or at least from my couch in Brunei.
It was only recently that I met up with that old friend again who was kind enough to explain it to me the best he could. But there was so much more to absorb on my own. I’ve been meaning to write an article about this for quite some time now and while I’m no expert, I hope I can put this concept as simply as possible. The reason is because it’s a very exciting development! Well at least to me. See for yourselves!
But before we go forwards, please heed this warning:
Bitcoin, altcoins and other forms of cryptocurrency are extremely Speculative and Volatile markets. Security is also in the early stages so potential theft and unrecoverable losses CAN occur. As such, it’s up to you to do your due diligence and research before going into it. And never, ever put in more money than you are willing to lose.
It is possible to lose ALL the money you put in!
Now that that’s out of the way, let’s get on with it!
What is Bitcoin?
A Bitcoin is a purely digital coin. Meaning it does not exist in physical form unlike our cash and online banking for example. The only way to transact using Bitcoin is to send it from one device (or more technically, a wallet) to another. There are a few key elements of Bitcoin that people like:
Bitcoin does not belong to and therefore is not controlled by any one person or body. Transactions are processed by a network of computers called miners.
2. Easy to set up
If you want to open a bank account, you need a minimum deposit, fill in a form and waste a few hours at the bank. With Bitcoin, all you need is to get started is download or buy a wallet, go through a simple set up process and you’re ready to start receiving and paying!
I personally do not like the anonymity aspect because this was the reason why a lot of shady transactions took place and put Bitcoin in a bad light. You may also hold more than one Bitcoin addresses (linked to a wallet) with no real link to you as a person. So no name, residential address and so on are tied to these addresses. However…
4. Transaction Transparency
All Bitcoin transactions are transparent; meaning anyone can check how much Bitcoin is transferred, where from and where to. But we don’t know who the addresses belong to. The transactions can be seen on an online ledger called the blockchain.
Think of the blockchain as a long chain of linking Lego bricks. Every Lego brick contains information of Bitcoin transactions. When miners complete working a block, it is added on to the chain and transactions on this block are said to have been “confirmed”.
Even with anonymity, this transparency makes it possible to link transactions to a person. This was done by the Danish police in a drug trafficking case.
5. Low Transaction Fees
Our banks charge upwards of BND20 to transfer money overseas. Bitcoin fees are the same regardless of where you are. You only pay for the network fees which is like a small tip given to miners to process your transaction.
6. Fast (sort-of)
Bitcoin is supposed to be fast. So far, transactions could potentially take an hour or so because of higher network traffic from people getting into it. One of the things looked at by the developers other than fees is speed of transaction.
Bitcoin transactions are irreversible i.e. final. That means if you send Bitcoin to someone by mistake, you won’t be able to get it back unless they agree to send it back to you. This is great in a business setting because business owners do not have to worry about expensive chargeback fees like those from credit card fraud. But it still allows human error to cause accidental loss by transferring to the wrong addresses and theft is permanent.
In-depth information about Bitcoin and blockchain technology are separate subjects on their own! To learn more, check out this website called coindesk. You should also check out this great resource by Jameson Lopp.
AMBD’s stance on Bitcoin in Brunei
Our Autoriti Monetari of Brunei Darussalam (AMBD) has been keeping open outlook with cryptocurrency in general. What I mean is they have not banned Bitcoin outright but do not accept it as legal tender either. They even put out a nice little Public Service Awareness cartoon in the newspaper.
I, for one, respect this decision as it allows people to develop FinTech (financial technology) in Brunei if they choose to. This also means normal people such as us are free to dabble in investing in Bitcoin but at our own risks.
Regardless, there have been many cases of scams disguised as investments. And even a fake news about the Sultan of Brunei going viral a few months back! One good resource I find is to check AMBD’s Financial Consumer Alerts and Updates. If an scammy “investment” company or group is listed, better stay clear from them.
Before buying Bitcoins
Before we dive into buying Bitcoins, you have to set up a place to store your Bitcoin. I personally use an app called breadwallet. Download it or any other wallet of your choice on your smartphone, set up the security and you’re ready to go!
Update: It has come to my attention that the breadwallet I’m using is quite outdated in terms of features and fee structure. I’m posting this information for visibility and for you to consider whether it’s worth it. Check out the other wallets before committing to one.
There are 2 basic functions everyone should know about their wallets:
1. Receiving address
This is the address you to send Bitcoins into your wallet. It’s made up of alphanumeric characters including capital letters and look something like this:
It could also be in the form of a QR code which the payer can scan to pay into.
Always, and I mean always, CHECK and double check that the address is correct before issuing a send command. I almost flipped out the first time I transferred and thought I got the wrong address (it wasn’t thankfully) before it confirmed.
2. Seed/Paper key
So let’s say you lost your wallet or your 2 year-old accidentally deleted your wallet app. Before you put the poor kid up for adoption, there’s actually a security feature to recover your wallet!
When setting up a wallet, you should be prompted to write down a series of words. It could be from 12 to 24 randomly generated words. Write down the words in the correct order: it must be in this particular order shown to you. These words are now your seed which can be used to recover your Bitcoins if you somehow lost your wallet. So keep that sheet of paper safely!
How to buy Bitcoin in Brunei?
Buying Bitcoin is simply finding a place where you can trade your cash for Bitcoins. These places are known as exchanges and honestly speaking, there are a lot of them. Also, a lot of them do not serve Brunei customers! A heads up too: many exchanges require you to scan your ID or passport and some sort of proof of address and upload to them. This is to perform what’s called the Know-Your-Customer (KYC) checking process in order to prevent money laundering and other shady business.
There are 3 ways I know of (and have tried) to buy Bitcoin in Brunei:
1. From other people
The easiest way to get Bitcoin in Brunei is to simply find someone willing to sell it! Mind you, the sellers usually mark up the price quite substantially (for profit, of course!) but if you don’t mind it, this will be the fastest way to get your digital coins; save for the fact that you have to socialise face-to-face.
Coinmama is a website which allows you to buy Bitcoins using a Mastercard or Visa debit or credit card. A word of warning though, I find the fees on Coinmama are quite high! They charge 5.50% PLUS another 5.00% processing fee. But if you’re willing or rushing for time, this is the fastest way to get Bitcoins from the comfort of your home.
Bitstamp is a cryptocurrency exchange which allows you deposit cash and then exchange it for Bitcoin. As it suggests, you would need to transfer money from your bank account into your Bitstamp account before getting your shiny Bitcoin. I like Bitstamp because it’s easy to use, they offer multiple ways to buy and the fees are bearable. If time is no issue for you, Bitstamp is a good service to check out.
Note: They took quite a while for my KYC though; almost a month. And their support was so tied up that they only got back to me around that time too. However, recently they’ve been getting back to opened support tickets quite fast; a good improvement in customer service. But I’ve seen a popup saying they’re gaining high traffic and could take some time to respond.
But Bitcoin is so expensive now!
One special thing about Bitcoin is that you don’t have to buy 1 Bitcoin. This is especially useful now that the price (as on 6th December 2017) is over USD12,000! Yes, 12 thousand US dollars for ONE Bitcoin! Fortunately, you can buy at your own price point because you can divide a Bitcoin up to 8 decimal points. That means you can buy USD1 or USD100 worth of Bitcoin; completely your choice!
0.00000001 Bitcoin is the smallest amount you can transact right now. Fun fact: this is known as 1 Satoshi; named after the wo/man who invented the Bitcoin protocol.
How to protect your Bitcoins?
Quite a number of people take their accounts on exchanges as wallets to hold their Bitcoins. This is actually quite dangerous as we can see from past experience where exchanges have been hacked, the most prominent being Mt. Gox in Japan. So how do you protect your Bitcoins?
1. Hot wallets
If you followed the earlier advice and installed a wallet app of your choice, you would already be using a hot wallet. The wallet is considered “hot” because it’s connected to the network somehow. The layer of security is digital and therefore “hackable” so to say.
2. Cold wallets
In recent years, hardware Bitcoin wallets have been developed and produced for the mass market to use. The most popular by far are TREZOR and Ledger. These wallets are “cold” because they are taken offline and you need to physically have these wallets (or at least the private key hidden within) to access the stored coins.
Other than hardware wallets the alternative for cold wallets is to create a paper wallet. Yes, your wallet is literally written or printed on paper. But by far, a hardware wallet is the easiest to use.
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How to check your Bitcoin transaction?
So you’ve sent or have been sent some Bitcoin but they have not reached the wallet yet. Yes, it has happened to me before and the way to check is to look at the blockchain at https://blockchain.info/
You can check any transactions by looking at:
- https://blockchain.info/[YOUR ADDRESS]
(note: your address being your Receiving address)
- https://blockchain.info/tx/[YOUR TRANSACTION ID]
(note: the transaction ID should be provided when you transfer from exchanges – Bitstamp does as far as I know)
If you don’t see any transaction on there, don’t panic yet. You can flag it up with the exchange and ask them to help rectify.
If it was between individuals, and as I said before, you have to double check the receiving address, otherwise the coins could be lost!
Bitcoin and blockchain technology have been gaining traction worldwide. The technology itself is pretty exciting but is beyond the scope of this little blog. AMBD has not outright banned Bitcoin in Brunei which opens up room for development of FinTech in the nation. It is entirely possible to buy Bitcoin in Brunei using some of the methods I mentioned. Using Bitcoin, however, is not accepted as of yet as with the rest of the world. But I’ve heard of some shops in Brunei who do.
It’s much better to see any Bitcoin you buy as a speculative investment. That being said. I cannot stress enough that doing proper due diligence before jumping in is paramount to minimising risk of loss. And again, due to the highly speculative nature of cryptocurrency, the risk of total loss is always present.
Invest safely, Readers!
“Vires in Numeris”
Translates to “Strength in Numbers”
– Bitcoin motto