In the digital world, on social media, in friendship circles, and many other places in Nigeria, cryptocurrency and Blockchain are trending topics. From the sudden emergence of these virtual currencies, their global acceptance and adoption, and gradually replacing physical notes, there is a lot to discuss around Bitcoin trading and business. Since 2009 when Satoshi Nakamoto created Bitcoin, it's been from one level of advancement to another for digital coins.
For a very long time, Bitcoin has been one of the major trending issues on Nigerian Twitter and one of the most search terms on Google.
You will find people on their phones checking their wallets and watching the chart on various exchanges every time to keep up with trading. They are doing so to know when to buy or sell their coins and when to stack them for future orders.
Many globally show interest in trading these new assets, including big names like Bill Gates, Jack Dorsey, and others who are booming the market.
Some people no longer keep their monies in the bank again because they don't buy into the idea of the conventional bank system's poor interest rate on savings. Instead, they prefer to have their money in a crypto wallet and watch it grow as the market grows.
The seeming global interest in this new digital renaissance is beginning to put pressure on many people in Nigeria and Africa. You'd find young people venturing into the Bitcoin trading business simply because they know someone making a lot from it.
Others venture into it because of the many publicity stunts around it being one of the best assets to invest in. Then, you have those who take their time to learn everything they need to know about new cryptocurrencies before getting involved with them.
No doubt, those in the last category are the ones likely to make a huge return on their investment in the crypto market and business in the short and long term.
Though appearing all attractive and profitable, the cryptocurrency world is one of patience, understanding, and quick-wittedness. It is a space that is not meant for the weak at heart. This is why if you must invest or trade in digital currencies, doing so from a place of understanding is vital.
This guide provides you with everything you need to know about new and existing cryptocurrencies and Bitcoin trading in general. Here, you will find answers to questions like - how does cryptocurrency work? How can you invest in cryptocurrency? And what is cryptocurrency mining? It's going to be a long read, but one that will be worth it in the end.
Understanding How Cryptocurrencies Work
The first step to appreciating virtual coin trading and how the market operates on Blockchain is to know how they work. With a firm knowledge of how these virtual currencies work, you can know how best to invest in them.
To give you a proper understanding of how cryptocurrency works, let's go through a brief history of these globally celebrated digital currencies and the many trade activities in the market over time.
For many years, financial transactions have been governed by traditional financial institutions that oversee the process of minting money, managing cash flow, and providing investment channels. In Nigeria, the Central Bank of Nigeria (CBN) is the legal body vested with that task.
Like Nigeria, many other countries of the world have this centralized banking system for their financial market to ensure order. However, while CBN is the leading financial body in Nigeria, it is not alone. We have other commercial banks, microfinance banks, and banking applications that have been created over the years.
Regarding money and financial transactions, there are laid down regulations provided for by CBN in Nigeria that every other financial institution must comply with.
However, in 2009, there was a massive shift from the norm regarding financial transactions, institutions, and regulations when Bitcoin was created. Though newsworthy, Bitcoin did not immediately gain the public's attention or the interest of investors.
In 2013 and 2014, Bitcoin recorded a major setback that saw it record a drop in value and almost destabilized its order. This happened because there were several security issues, criminals started using it to launder money, and investors started losing interest. However, this didn't last long as it bounced back in 2015 with more digital coins like Ethereum and Litecoin springing up.
The working of cryptocurrency assets and the activities of traders may appear simple, but it isn't. These assets are sustained through a process called mining. When available, users can buy them with a certain amount hoping that when the value increases, there is a high chance of selling at a price higher than what they bought it.
Today there are numerous types of cryptocurrencies totalling more than 4,000 and several traders who continue to use these assets.
What Are The Best Ways To Invest In Cryptos?
The place of investment is where Nigerian traders get it wrong with cryptocurrency. Many people in Nigeria have a head knowledge of what cryptocurrency is all about but suffer a loss when deciding to invest. This is because they are not aware that there is a science to investing in this asset called cryptocurrencies.
Let's start from the simple and what appears to be the most common way of investing in crypto - buying and stacking these assets in wallets. Many traders who do not or cannot go through the stress of trading crypto, buying, and selling prefer to buy and keep their assets in different wallets.
As more people purchase and use a particular digital coin, it makes it scarce. The scarcity of a particular currency - digital or physical is what makes it valuable.
When crypto traders buy and keep a digital currency in their wallet, you will discover that the value of their asset has increased after a while when it has become scarce. This means that if you proceed to use or sell it at that point, you're no longer selling at the price you bought it but at a higher price.
Besides buying and stacking your asset in a wallet, you can trade it on any of the available exchange platforms like Binance, Luno, or Coinbase. Crypto exchange works similarly to the foreign exchange of physical notes. It simply means you're buying a digital currency when it is low, keeping it in your wallets, and selling when high. That way, you have your initial investment and the profit made from reselling in your wallets.
For profitable investment in cryptocurrencies, there are important factors to take into consideration, and some of them include:
- Have a definite amount you want to invest and, as they will say in business, make sure it is money you don't mind losing.
- Create an account and have a wallet with a reputable exchange platform to make your assets safe. To determine the quality of an exchange platform, you should look into their rates and the security measures put in place for transactions.
- Find an investment strategy and time of the day that works for you and stick to that strategy. However, before coming up with a technical strategy, make sure you have read a lot about different markets and the risk of investing.
- Don't be emotional about investing, be intentional instead. Investing in digital currencies is not for the feeble-minded. It is a very volatile space as several factors can influence the rise or drop in the price of a particular coin. So, if you must invest, you need to do so intelligently and with the right strategy.
- Investing in virtual coins will require patience and a desire to always learn. Crypto investment is not in any way a Ponzi scheme or a get-rich-quick thing. It requires hard work, attention to detail, and patience to use the assets you have to get what you want.
Understanding What Cryptocurrency Mining Is About
Cryptocurrency mining started immediately after Bitcoin was created in 2009. Certain rules and regulations were created to guide cryptocurrency mining as it requires a lot of data and energy. Cryptocurrency mining works through a rig system that helps to prevent double entry.
Bitcoin mining appears to be the most complex and the most rewarding for traders. Miners have a mining target set for them alongside the ability to make intelligent guesses for them to be entitled to the reward that comes with it.
When Ethereum came into the scene, it revolutionized how mining was done by introducing hash and blockchain. The same way information is entered into a ledger in the traditional banking system is how information is entered in blocks using a hash.
Blockchain technology solved the issue of insecurity that characterized the cryptocurrency world for many years. It presented a more transparent way of recording data in blocks in a way that cannot be altered or manipulated. With blockchain, many individuals have designed programs that reward people with coins for completing specific tasks.
No doubt, crypto is the future of currencies globally. Recently, we have seen many businesses, particularly e-commerce websites integrating virtual coin into their payment structure and technology. In Nigeria, there is also news of CBN putting in place measures to adopt cryptocurrencies in the future.
Like it has been provided in this guide, the value of cryptos will continue to go up in the coming years as it's the future of money, and that is why there is no better to learn and invest than now.
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