Everyone is talking about crypto! But what is cryptocurrency, and why should you invest in it? In simple terms, a cryptocurrency is a digital form of currency that is secured by cryptography and based on blockchain technology. Cryptography involves encrypting data including transactions and user information; blockchain technology is a system of recording transactions and data.
The information stored in a blockchain cannot be changed and is distributed across a network of participants. Personal data is always encrypted, and individual identities are hidden. Additionally, cryptocurrencies are not issued by a centralised authority or regulated by governments. This often means that cryptocurrency changes in value much faster than other types of currency.
Let's face it, it's difficult to understand cryptocurrency despite it gaining more popularity than ever in recent years. With so much to learn about cryptocurrency, it can be easy to throw in the towel and choose a more traditional investment.
But you don’t have to give up just yet! We’ve compiled a handy guide on everything you need to know about investing using online brokers. That’s why we pride ourselves on being South Africa’s information hub for all things related to finance and money.
Cryptocurrency is famously volatile; this means that the value of your investment can drastically increase or decrease overnight. For people who don't mind the added risk, this can mean an unbelievably large return on investment. For example, one Bitcoin was worth R639 948.55 on 13 February 2022. By 16 February 2022, the value of one Bitcoin was R663 057.12. This is a staggering R23 108.57 increase over the course of three days.
Trading cryptocurrency will allow you to take advantage of this volatility. Of course, many different people may have their takes on how you should trade crypto to make the most out of your money. At the end of the day, you should find a trading strategy that you are comfortable with and that makes sense for your financial goals.
Popular methods include short selling and going long. Short selling allows you to take advantage of a falling market. This involves selling when the price begins to drop and buying back before the price picks up again. Going long involves taking advantage of a rising market. This is achieved by buying when the price begins to rise and then selling before the price begins to fall.
There are a few popular crypto exchange platforms for South African users including Ovex, Valr, ChainEx, and Luno.
Ovex is actually based in the Western Cape, South Africa and trades various cryptocurrencies including Bitcoin and Ethereum. Valr is also a South African company based in Johannesburg. This crypto exchange supports over 50 different cryptocurrencies and even offers rewards for getting friends and family to sign up using a referral code.
ChainEX is based in the Eastern Cape and offers a unique customer service experience. The company boasts a helpful telegram community with live calls. ChainEx currently only offers 20 cryptocurrencies, however, these include Bitcoin, Ethereum, and various alt-coins.
Luno is an internationally recognised crypto exchange platform that supports South African Rand transactions. In fact, many major South African banks have Luno listed as a public beneficiary on their online banking systems.
Bitcoin is not the only cryptocurrency you can buy! While Bitcoin may be in the media more often than forms of cryptocurrency, there are plenty of cryptocurrencies on the market that also offer high returns.
Other popular cryptocurrencies include Ethereum, Solana, EOS, Litecoin, and Cardano. Each of these cryptocurrencies has something unique to offer buyers; the right cryptocurrency should suit your goals. For example, Ethereum is said to be an ideal cryptocurrency for people who want a long-term investment.
When it comes to dealing with cryptocurrency, you need to exercise a great deal of caution. Every year scammers make millions from cryptocurrency. So let’s talk about common crypto scams and how you can avoid them!
Similar to fraudulent apps, there are many fake crypto exchange websites. These websites also tend to resemble legitimate exchange platforms with similar logos, branding, and formats. Besides checking the website itself for irregularities, there are a few other things you can do.
You can check if the site is secure by looking for the closed lock icon next to the URL in your browser. You can inspect the URL and information on the website for any obvious mistakes and misspellings. Importantly, you should search the company up online and inspect their social media and independent reviews. This information should line up with the information available on their website.
Unfortunately, there are many fake cryptocurrency exchange apps available for mobile devices. These apps may have similar logos and interfaces compared to reputable apps, and may even try to masquerade as a different app.
However, there are a few ways you can recognise a fraudulent app. This includes misspelt words, incorrect grammar and deviations in the logo and branding. You should also check out the details of the developer and reviews before downloading an app.
This type of scam usually occurs in the form of an email. This email may seem to be from a legitimate source: it may carry the same format and contain the same logos. However, these emails are designed to steal your personal information such as your login details.
This method isn't exclusive to cryptocurrency; if you bank online at all you should be wary of emails asking you to click on links or supply your personal information. Additionally, be wary of emails advertising investment offers that seem too good to be true.
There isn’t a right or wrong answer when it comes to which cryptocurrency you should invest in. Neither is there a perfect cryptocurrency exchange platform. The right platform depends on your needs. How much are you willing to invest in cryptocurrency? What cryptocurrency are you interested in buying? Are you looking for a desktop or mobile app?
Even if you understand the basics of cryptocurrency, it can help to learn more about trading techniques. Additionally, as cryptocurrency is unregulated and managed through various systems such as blockchains it can be useful to stay on top of the changes and advances in financial technology. You can do this by following various financial and tech news outlets or reading about it in books and on sites like BudgetGist.
When it comes time to decide on a crypto exchange platform, it should be easy to pick a legitimate, secure platform that allows you to make safe, swift withdrawals and trades.
Before making any transactions or even logging in to your account, ensure that the website or app is legitimate. If you are pasting a URL double or triple check if it's correct. Familiarise yourself with the platform’s logo, branding, and procedures. Finally, if you are redirected to another page to make a deposit or payment, thoroughly check the page for authenticity and security.
When it comes to investments, there’s always risk involved. Luckily, BudgetGist is here to keep you informed. We are South Africa’s information hub for all things related to finance and money.
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