Kenya is among the few African countries doing very well in the trade of cryptocurrency in Africa. Bitcoin was launched in Kenya in 2007 and since then, it has been the talk of the town. While it is easy to trade in cryptocurrency, it has its ups and downs.
If you are just starting to buy and sell cryptocurrency, here is a guide for you.
What are Cryptocurrencies
Cryptocurrencies are digital assets or currencies that are used as a medium of exchange. The assets are stored on digital ledgers and are secured using cryptography. Cryptocurrency are decentralized, meaning that they do not have a central point of authority.
Features of Cryptocurrencies
- Decentralized. Digital currencies are owned by a community and do not have a central point of control.
- Peer to peer. You can easily transfer cryptos from your wallet to another person's wallet located anywhere in the world.
- Cheap. Sending cryptocurrencies will only cost you a few cents, depending on how much or where you are transacting.
- Fast. Sending and receive cryptos takes a few seconds or minutes, depending on the currency you are transacting. Bank transfers can take up to even three business days.
How to Get Started with Cryptocurrency Trading
1. Get a Cryptocurrency Wallet
Just like standard currencies, cryptocurrencies require you to have a blockchain wallet. A wallet is an app that allows you to store, buy, and sell your cryptos. They come in many different forms. Wallets are currency-specific, meaning that each currency has its own wallet. You cannot receive or send coins from different wallets.
You need to secure your wallet with a strong password to protect it from internet hackers. Make sure to back up your wallet security in case you forget your password or lose your device.
2. Send and Receive Cryptos
To start sending and receiving cryptos in your wallet, you need to select the best exchange. You need to get the best exchange brands in the market. Buy cryptos from reputable sources only to avoid losing your money to con men. Do not go for the cheapest deals but instead go for the most secure deals. For instance, Coinbase is the most trusted exchange platform. It has a customer support that answers customers' questions instantly.
3. Buy and Sell Cryptocurrencies
Once again, ensure that you trade with trusted brokers only. You can choose to become a cryptocurrency dealer, broker, or agent. You have an option on how you want to settle your transaction. You can use a bank or mobile money to transact. Then the broker will ask for your cryptocurrency address. The address is a hexadecimal string. Click on receive so that you can then copy the address and send it to the broker.
One thing about cryptocurrencies is that their prices are not fixed. Prices fluctuate from time to time. As such, if you want to buy cryptocurrencies, wait until when the prices are low. This way, you can buy them at low prices. If you're going to sell them, wait until when the prices increase so that you can sell them at a better price. This will help you to make profits.
Apart from buying and selling cryptocurrency, you can also use them to make online payments. For instance, if you are trading in Bitcoins, you can use your Bitcoin balance to make payments online.
Read more: Best online payment platforms.
4. Automate your Strategy
One of the things that give people headaches in cryptocurrency is their need to stay awake to monitor prices. This is a hectic thing, and you cannot always be online. You can look for trusted online tools and applications that will help you automate the process. Sign up for one so that you do not have to stay online monitoring prices.
You also need to look for a successful strategy that does not burn you out. Strategies like indexing and rebalancing will reduce the level of risk whenever you are trading.
5. Build a Portfolio
It is always good to distribute risks across several assets. Investing in one asset is a recipe for a loss. You need to diversify and reduce risks in a single asset to improve the risk-adjusted return. Some of the most trusted currencies that have proved profitable in the market include Bitcoin (BTC) and Ether (ETH). Even if one asset makes a loss, the other can make a profit and make up for the other asset's loss.
6. Keep your Assets in Cold Storage
Avoid storing your digital assets in exchange even when you have the most secure wallet. It is because it is at risk of hackers. Ensure that you only have funds in exchange only when you want to trade.
The cryptocurrency industry is full of risks and opportunities at the same time. If you follow the guideline, you will be on the safe side and it will be easy for you to make profits. You will also avoid losses. To succeed, you also need a lot of patience. The value of your portfolio will rise as time progresses. Keep on learning on a day to day basis and finally, you will have mastered the strategies.
Read more: How to monetize gaming and animation.