Whether you’re an expert or not, cryptocurrency is mostly likely on your radar. From Elon Musk weighing in on Dogecoin, to fluctuations in Bitcoin’s prices, and talks of ‘bubbles’, the whole industry can seem a tangle of digital lingo and investment FOMO.
Despite cryptocurrency still being in relative infancy compared to our current currency system, both serious investors and basic consumers are dipping their toes into the world of crypto and, some making profits. It’s no surprise, with Bitcoin’s value hitting an all time high of $63,3765 in April of this year.
But as with any investment, values both rise and fall. If you’re not sure if the world of Bitcoin, Dogecoin and Ethereum are for you, read on to make sense of this new investment/currency portal.
What is cryptocurrency and how does it work?
Like cash is a physical medium of exchange, cryptocurrency is a digital medium of exchange. Exchanges can be made without the need of a third party (such as a bank) and transactions are logged publicly online to avoid fraud.
Bitcoin was the original cryptocurrency, which began in 2009. But as of today, there are more than 4000 cryptocurrencies in existence. One Bitcoin currently equals R790,920 as of May 2021.
Cryptocurrency is gaining interest mainly because:
- Supply is controlled
- It does not belong to any country or government
- Transfers do not rely on third parties
- Transactions are secure and anonymous
How do we buy cryptocurrency?
It’s not a choice to make lightly. Cryptocurrencies can experience extreme fluctuations in value, plus, there are many individuals who are ready to take advantage of investors who aren’t cryptocurrency savvy. Remember when a few high profile Twitter accounts started tweeting visibly hacked cryptocurrency tweets?
Here are the basic steps to buying cryptocurrency:
- Find a reputable cryptocurrency exchange operator. To find a safe and reliable cryptocurrency exchange remember the following:
- Does the company have a proven track record?
- Do they provide security features?
- Are they backed by reputable investors?
Luno is currently Africa’s biggest cryptocurrency platform to buy, sell, store and trade Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin and more.
2. Sign up with your chosen operator to verify your identity and get a valid account
3. Buy, sell, store or trade in your chosen cryptocurrency
Which cryptocurrency is best to invest in?
There are thousands of cryptocurrencies on the market, but the top three include:
This cryptocurrency is not only the first in existence, but also accounts for about half the total value of the cryptocurrency market. It is currently worth $1.065 trillion.
Ethereum accounts for about 14% of the total value of the crypto market and has been around since 2015. It is currently worth $498.5 billion.
- Binance Coin
This cryptocurrency accounts for about 4.3% of the total value of the crypto market and has been in the market since 2017. It is currently worth $102.8 billion.
As with any developing financial product, cryptocurrency has its ups and downs, and requires extensive research before diving in. In summary, if you have the capital available to take the risk, understand the product and choose a reputable exchange provider to help you navigate the experience.