As the crypto boom is being felt across Africa, many young people are taking this emerging technology and all its offerings as an opportunity to access financial services and engage in financial activities such as trading to earn a living. The limited access to financial services in most parts of Africa and the large number of the population who remain unbanked in rural areas has led many of the tech-savvy younger generations to look for alternatives.
The rising penetration rate of smartphones and the internet across Africa has provided the young with an opportunity to venture online and discover new opportunities.In recent years, cryptocurrency has been one of the most desired avenues for accessing financial services and making investments so as to gain financial freedom, for many people across Africa.
Crypto adoption across the continent has been on an upward trend, with the region receiving about $105 billion worth of cryptocurrency in the period between June 2020 and June 2021.Investments in crypto are easy and do not require long and strict guidelines, with just a smartphone and internet access, you can start trading in crypto by following these simple steps:
- First you have to identify a crypto exchange for your investment. There are many crypto exchanges to choose from, including Binance, Coinbase and many others. For some regions like Kenya and Nigeria where governments have banned banks from dealing with crypto, people are turning to P2P exchange platforms.
- Create an account : In creating an account, just go to the exchange website or app and sign up. After signing up, you will need to verify your account, this may be done by uploading certain documents to verify your identity as this protects you and others from fraud.
- Deposit funds into your account: To buy crypto you need to have funds in your account. You may deposit using wire transfers, credit card or bank. Some P2P exchanges have made it easier to deposit funds by allowing mobile money transfers.
- Place an order for the crypto of your choice: Once you have money in your exchange account, you can now buy crypto.There are many different cryptocurrencies for you to choose including popular names like Bitcoin(BTC), Ethereum(ETH), Tether (USDT), Dogecoin(DOGE) and hundreds more.
- Finally you can choose where to store your cryptocurrency. When you buy crypto on an exchange they are stored in a crypto wallet, you may choose to leave your cryptocurrency on this wallet or opt for a more secure option like cold wallets.
Cold wallets are digital wallets that are not connected to the internet, they may be in the form of a USB or a hard drive.
Just like any other investment, before choosing to invest in crypto, you should always make sure that your current financial situation allows you to invest and that you have mapped out your investment goals clearly.
Helpful Tips As You Invest In Crypto
Cryptocurrencies have a high volatility rate, meaning that their prices can rise and fall rapidly diminishing their value. Before you invest, it is wise to do a proper research on the crypto market.Learn about the different cryptocurrencies, by using the varied resources available online such as charts on different crypto, the market capitalization and the price fluctuations. With so many coins and tokens available, try and learn as much as you can about them before choosing a specific crypto to invest in.
Do your own research on the different exchanges available and choose the one that works better for your financial needs. You should always strive to pick a credible exchange platform or a broker to ensure that your coins or tokens are secure.To know more about a particular crypto, you can find its whitepaper and get more information about its offerings. You can also join online groups where crypto enthusiasts discuss issues concerning crypto and the current market.
Always remember that cryptocurrencies are highly unpredictable but when you have clearly defined investment goals and you have gotten to know the coin/token and the exchange you can trust, it will be easier to invest.
After deciding to invest and already having crypto in your wallet, the next step is trading either by buying or selling. Here, timing becomes very important. This is because of the highly volatile nature of crypto. You should always keep an eye on the market trends to know what is going on as a simple tweet or news could increase the value of a certain coin or decrease its value greatly.
When your cryptocurrency value is gaining and on an upward trajectory it is always wise to take profit by selling. This is because in the world of crypto nothing goes up forever, the price fluctuates over time.Don’t FOMO (fear of missing out): Many investors may want to buy a new token or coin with the fear of missing out if that particular coin becomes more profitable. When you see a token that is gaining value at a high rate and you did not get it at its initiation don’t just jump in just because everyone is doing it.
In most cases the coin/token creates a wave and this leads to a large market order being placed, after some time the value drops and if you had just invested, you end up losing a lot.Keep an eye on new emerging trends: Being informed about new and emerging crypto trends can make your investments worthwhile. For example the emergence of NFTs dominated headlines and brought huge returns to investors.When new trends emerge it is good to invest in some of the offerings before they take off and when they do well and earn huge returns, it is wise to take the profits rather than waiting and losing when the price starts to drop.
As long as you are making a profit, your investment is worthwhile so do not rush to make investments just because others are doing it.
Keep up with global events:
Events such as regulations or new technologies (Web3) may impact the crypto market and therefore being aware of the changes in regulation will help you make better investment choices.
- Diversify Your Investments
Although crypto has a huge opportunity for greater returns on investments, it is always wise to take the profits earned from prior crypto trades and invest in other financial undertakings.By diversifying your investments you will protect yourself from financial ruin by having a nest egg or a fallback plan in case the crypto investment does not yield expected returns.
If you are only focusing on crypto investments then it will be wise not to put all your money into a single cryptocurrency. This is because of the unstable crypto market, that may lead a particular coin/token to tank in price.Investing in different coins and non-fungible tokens, minimises the risk of losing all your finances if one investment drops in price.
- Be Cautious
Unfortunately the possibility of huge returns in crypto investments has brought with it other risks such as scammers and fraudsters.When handling all your crypto investments be aware of potential scammers who promise potential investments with huge returns via emails and texts. These should raise red flags and should be avoided.To keep your investments more secure you can choose to use offline storage devices such as disk drives as hot wallets.
Before taking the leap to invest in cryptocurrency, make sure that you have the finances that allow you to take an investment risk. Just like any other investments you should always ensure you have enough to meet your immediate obligations and to invest.
Take into account the volatile nature of cryptocurrency before making an investment. It is always wise to invest what you can afford to lose without being financially ruined.Any investment is a risk therefore it is wise to ensure that you have done ample research on the crypto you want to invest in and the exchange you will use.Finally, the digital market is always changing, as an investor you should strive to keep up with global events such as regulations that may change the crypto market.