There have been many misconceptions about cryptocurrencies. Most came from the fact some people got introduced to Bitcoin through Ponzi/pyramid schemes, no wonder such people associate Bitcoin and other cryptocurrencies with Ponzi/pyramids.
Cryptocurrencies can be viewed as digital money and just like the fiat money (Naira, USD, etc) it can also be used for illegal ventures like Ponzi/pyramid schemes.
What are Cryptocurrencies?
Cryptocurrencies are digital currencies secured by codes/cryptography. It’s almost impossible to counterfeit.
Cryptocurrencies are ideally not under the control of a central body and therefore not under any government’s interference.
There are over 2000 cryptocurrencies currently in existence but don’t be in a hurry, not plenty of them are worth your investment. You can go to Investopadia blog to read more on general overview of cryptocurrency.
Examples/Types of cryptocurrencies
And plenty others.
All other coins/tokens apart aside Bitcoin are usually referred to as Altcoins.
Legality of cryptocurrencies
They are legal in most countries including Nigeria. You can read more on Wikipededia page about Legality of bitcoin by country or territory.
Why invest in cryptocurrencies?
The cryptocurrency market can be likened to the stock market with some differences.
The cryptocurrency market runs 24 hours a day and 7 days a week without breaks.
Cryptocurrencies are decentralized and not controlled by a single institution like a government or central bank, but instead are divided among a variety of computers, networks, and nodes.
Barrier to entry is very low for cryptocurrency market. You can start with as low as $2.58 United States Dollar (which is about N1,000 in Nigeria currency) but it’s not advisable for such a small amount.
Cryptocurrency market is highly volatile. One can make 100% profit in a day and can lose same in a day as well. Get the right knowledge and win the game is the KEY.
Countries are already talking about getting their national cryptocurrencies. Venezuela with its unimaginable inflation rate has gone ahead to get their national cryptocurrency (Petro) which is claimed to be pegged to their oil reserve. Wikipaedia also has a documentation about this.
Some cryptocurrencies like the PAX, USDC and BUSD that are stable coins can be used to hedge your funds in USD against inflation. These stable coins are backed by actual USD reserve at 1:1 ratio so your fund remains same value in USD over the years.
You own your cryptocurrencies 100% once they are in your own wallet.
Cheapest way to buy cryptocurrencies with fiat
Currently, Binance exchange is the cheapest place to buy cryptocurrencies with any local currency.
Before this method was made available I was buying Bitcoin and Ethereum with Naira through Luno and the transaction fees were insane.
Binance charges only N150 (and that is 0.39 United States Dollar as at 2020 pandemic crisis, Dollar exchange rate increased) for each transaction and payment is made by online/offline bank transfer. Bank cards can be used for payment but the charges are higher and therefore not advised.
You’ll need to do KYC with Binance using your driver’s license or international passport to use this feature.
You may register with my affiliate link to get 20% of my referrer award (total of 40%) I’ve shared with you; https://www.binance.com/en/register?ref=Z2J40XPL
Please note that it is better than not getting anything. Because Binance doesn’t award any credit to new accounts extacpt when refered by someone and the the referrer shared his credit with the new account.
When you’ve gotten your Bitcoin or Ethereum you can then exchange them to any other coin/token you want in exchanges.
Where to convert your cryptocurrencies to fiat (preferred currencies)
You can sell your cryptocurrencies to your local or preferred currency in binance (HERE) and withdraw the money directly into your local bank account within few minutes. The charges are very friendly too.
Common mistakes newbies to crypto investing make?
- Investing without proper knowledge of the business.
- Not treating cryptocurrency Investing as a real business just like real estate businesses and industries.
- Not doing a thorough research on any cryptocurrency to be invested
- Not diversifying their investment and going all in in one token/coin
- Not having a wallet they control the private keys/seed words.
- Not storing their private keys/seed words securely.
- Storing/leaving their cryptocurrencies on exchanges. People lose funds when exchanges fold. This isn’t common but it happens.
- Chasing cryptocurrency pumps (FOMO/Fear of missing out)
- Trusting their funds to a third party without a properly signed agreement that involves a lawyer.
- Joining cryptocurrency Ponzi/pyramid schemes and doubling groups.
- Exiting a trade position too early or too late. There is a psychology to trading that must be mastered.
Best ways to invest in cryptocurrencies and avoid getting scammed?
Study thoroughly before investing: Get all the knowledge that is required because you are better off doing it on your own than giving your money to someone else. You don’t expect to enjoy the full profits of this business when you’ve transfered the liabilities to someone else. And always sign an agreement if you must give your funds to someone else to trade for you.
Invest only in projects you’ve studied: Conducting a proper study well on each project helps to eliminate the chance of investing in scams. There are many areas to cover in this research. Areas like the token economics, token supplies, token release, project development, teams, community engagement, etc are very important.
Conduct all trades through trusted exchanges: Don’t use questionable exchanges to avoid losing your funds.
Diversify your portfolio: Have different projects from different sectors and have both high cap and low cap projects.
Taking profits from time to time
Set your own profit margin and be considerate about it. The profits can be stored in stable USD coins (PAX, BUSD, USDC) if you want to preserve the dollar value or in Bitcoin if you are more interested in preserving the Bitcoin value.
Avoid the urge to enter a trade when the price is in big green (going up), you stand a big chance of getting dumped on by those that entered the trade earlier than you.
Where to get cryptocurrency prices live
There are several ways of sites to get real-time cryptocurrency prices live. To start with is your Crypto Wallet. Every Wallets has a live update of each crypto currency it supports – whether centralised or decentralised wallet.
See difference between a centralised or decentralised crypto wallet here.
Also, I would recommend coinmarketcap.com to go vital details about any existing cryptocurrencies, not just the live prices.
Plan on how to transfer the cryptocurrencies to an heir in event of death
So many people with huge funds in crypto had those funds trapped after death. If nobody knows your private keys/seed words your funds is locked away forever.
You can write down your seed words, seal it and employ the safe custody service of banks. This service comes with a yearly service charge and allows you to own a safe in the bank and solely hold the key. The heir should be made aware of existence of such an asset and safe.
Hope this page was helpful?
Let me hear from you through the comment box below. Also ask your questions or/and contributions.