In the past decade, cryptocurrencies such as bitcoin have become popular because of their Cryptocurrencies like bitcoin have become popular in the past decade because of their money-making potential and decentralised features. The Bitcoin craze has also reached Kenya for the same reasons. Now, hundreds of cryptocurrency exchanges are available for Kenyan users like you.
But buying and selling Bitcoin on these sites is just the tip of the iceberg if you want to profit. Start your crypto journey with one of the world’s most famous crypto coins. Learn how to invest in Bitcoin successfully and learn trading strategies here at Crypto in Afrika.
What is a Bitcoin investment?
Bitcoin investment in Kenya is pretty much the same as in the rest of the world. In essence, BTC is a digital asset that allows a secure transaction through peer-to-peer trading. Its decentralised nature is possible through blockchain technology.
Unlike other investments, Bitcoin doesn’t have a physical form. Market supply and demand, competition, regulations and other forks within the blockchain determine its value. This makes its value highly volatile and prone to sudden fluctuations, a risk you must consider before purchasing.
When investing in BTC, you must have a secure wallet to store your assets. You can find wallets through apps, hardware or built-in cryptocurrency exchanges.
The first and foremost strategy when investing in cryptocurrencies is to research any platform you’ll use to avoid compromising your assets. Check the history, user reviews, and security measures being implemented.
Tips on how to invest in Bitcoin and make money
Now that you know the basics of Bitcoin, here are some known methods Kenyan investors use to grow their BTC investments and make money:
1. HODL strategy: Purchase and hold Bitcoin
Purchasing and holding onto bitcoin is known as the HODL or ‘hold on for dear life’ strategy. HODL-ing bitcoin means keeping your assets despite extreme market changes. In this strategy, investors buy crypto and hold onto it while the market is volatile until it becomes favourable again.
When investors decide to hold, they look past the short-term losses and instead focus on the long-term gains when currencies appreciate.
Bitcoin mining is a process wherein ‘nodes’ verify transactions on the blockchain by solving cryptographic hash puzzles. Once checked, it’s added to the global network that stores records of transactions on a Bitcoin code. In turn, new bitcoins are created or ‘mined’ and rewarded to players who maintain this blockchain system.
3. Cloud mine
In cloud mining, BTC is mined through cloud computing resources without installing hardware or software. This saves miners more time and resources than traditional mining methods.
Additionally, groups of cloud miners form a mining pool and purchase’ hash power’, the combined computational power needed to mine. Once done, cloud miners who joined are given a share of the profits based on how much hash power they contributed.
Companies like Pionex, Genesis Mining, and Hasnest allow users to mine remotely by opening an account on their platforms. This makes mining more accessible to beginners who want to grow their crypto.
4. Trade Bitcoin
Another way to earn crypto is through trading. This process allows users to buy and sell crypto on exchanges. Usually, traders can use fiat to purchase the asset on exchanges like Coinbase, Gemini, and Binance.
Many different trading strategies exist, such as spot trading, day trading, scalping and swing. Choose a strategy that aligns with your goal and risk tolerance.
5. Earn with interest by crypto lending
As the name implies, crypto lending is when exchanges or investors deposit crypto to the borrower’s account for a fee or with interest over time. This is much simpler than asking for a loan in a traditional bank because it doesn’t require a lengthy application process.
6. Affiliate marketing
Many crypto exchange platforms use affiliate marketing to help grow their presence and user base. Usually, users must sign up to become an affiliate to receive given links and a script.
Once a link is given, affiliates spread the word on social media sites, forums, and blogs to attract registrants. These affiliates are rewarded with crypto or fiat currencies for expanding the platform.
7. Play crypto and blockchain games
Another way to earn Bitcoin is by playing crypto and blockchain games. How players earn crypto can differ from game to game. Still, typically, players are rewarded with crypto for earning experience and buying and selling Non-Fungible Tokens (NFTs) within the gaming platform.
Aside from NFT games, you can also try playing crypto games on casino sites. Here, you can wager and receive payouts using cryptocurrencies such as Bitcoin.
Guide to investing in Bitcoin in Kenya
Because there are multiple ways to invest in Bitcoin, as stated above, you need a guide on what to look out for. Here’s what investors from Kenya need to know before diving into the market:
1. Know what you’re investing in
Before investing in any asset, you should know everything about it, from its history and past performance to future predictions. When choosing a cryptocurrency, read its whitepaper to know its key features, specifications or development timeline. This information will help you better make sound decisions and, in turn, see returns and profit from your investments.
2. Choose a reliable exchange platform
The rise of crypto paved the way for exchanges to thrive since users needed a reliable platform to trade and store their assets. When deciding what crypto exchange to use, check the security measures such as 2FA and KYC implemented by the site. Trading fees, minimum bitcoin investment, terms and conditions, and reputation are some of the information you need to consider before making a decision.
3. Keep an eye on the volatility
Volatility measures how a coin’s value has shifted based on market trends. Bitcoin, for example, is a high-volatility coin whose value regularly fluctuates
Though high-volatility currencies may mean bigger risks, they also mean bigger returns. In the same way, low-volatility currencies are stable but generally see low-profit returns for investors.
Having enough crypto knowledge and staying updated on the market swings will help you minimise losses.
4. Find secure storage for your assets
Recent years have seen more cryptocurrency hacks and scams, so keeping your investments safe is important. There are many ways to keep your bitcoin secure, but the best way is to store it in a cold wallet. A cold wallet is a type of crypto storage held offline, which lessens the risk of breach from hackers. Some offline wallets you can use are Trezor and Ledger.
5. Manage your risk
Having a risk threshold is important and useful. Since crypto is a volatile asset, there’s always a risk involved that investors need to be comfortable with.
Risk management practices and risk appetite testing are strongly advised, so you know how comfortable you are in profit gain and loss situations.
Here are some ways to manage your risk:
- Diversifying your portfolio
- Predicting when asset values will change over time
- Learning and accepting that there will be losses in making crypto investments
- Starting with the minimum amount to invest in bitcoin for beginners
6. Only invest what you can afford to lose
No investment comes without a risk. So, you should only invest the amount you can afford to lose. Moreover, having a predetermined budget before investing is important to control how much money goes into your portfolio. While it’s true that investing bigger could yield more returns, it’s still not guaranteed.
7. Monitor your investment
As an online asset with a 24/7 market, monitoring the performance of crypto investments can be quite taxing, but this is why crypto portfolio tracking apps exist.
Keep track of market trends by making a personal investment tracker of your biggest and lowest purchases.
8. When the time is right, sell your bitcoin
As part of any investment decision, sometimes selling your hard-earned Bitcoin is the best decision. That said, you have to strike at the right time before selling. For example, many prefer to buy bitcoin in the early mornings and at night when it’s less busy. In contrast, you should sell your bitcoin when the original amount has doubled or tripled for profit or when a better investment is discovered.
How to choose a Bitcoin investment platform
To make the right choice in choosing a Bitcoin investing platform, you need to consider the following factors:
Security should be one of the top priorities when choosing an investment platform. Fortunately, most crypto exchanges implement advanced security measures such as two-factor authentication and identity verification to secure your assets.
Some exchange platforms even provide built-in cold storage wallets, frequent infrastructure and code checks and security protocols like Anti-DDos, which protects the site from bot requests to enter.
- Coin Variety
If you’re looking for multiple investments to generate profit, choose an exchange with a diverse coin selection. Different platforms will offer various coins, but most offer the top 8, which, at the time of writing, are Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance Coin (BNB), Ripple (XRP), Cardano (ADA), Polygon (MATIC), and Dogecoin (DOGE).
Smaller or newer platforms will have up to 50+ coins available, while more established exchanges will have about 300 or so coins supported.
Many fees are associated with crypto exchanges, like trading, maker, and taker fees. Crypto fees normally range from 0.1% to 1.5%. For example, Coinbase has a maker fee of 0.4% and a taker fee of 0.6% in a transaction.
You may also encounter other charges from subscriptions to wallets or premium services like access to cold storage wallets.
Liquidity in crypto is the availability of swapping a digital currency for another or fiat currency. So, when choosing an exchange to invest in Bitcoin, ensure it has high liquidity to maximise your profits.
Performing crypto exchanges also have user interfaces that are responsive and accessible. A crypto exchange with an organised layout of pages, dropdowns, and articles will make the features or services you may need convenient and easy to navigate.
Crypto exchanges that offer insurance for your assets tie in with their security preparation. This means that they ensure their users from the risks of loss from potential breaches and crypto theft.
To check if an exchange platform provides insurance, see if they’re partnered with security commissions or insurance companies and if the regulations are being upheld.
A crypto exchange’s reputation in the industry indicates its credibility and trustworthiness. But while platforms like Binance and Coindesk already have reputations cemented in place, it’s still important to look at their history and previous issues. Reading customer feedback and reviews also helps you gauge a site’s reliability. Similarly, lesser-known platforms should be treated with more caution and research.
- Tax Reporting
Currency exchanges, like other investment firms, pay taxes. An example is cryptocurrency taxation in the U.S., wherein cryptocurrency is taxed as a capital asset, and transactions involving gain or loss must be reported.
Knowing all this, crypto exchanges that properly pay taxes mean they’re compliant with governing bodies and, in turn, reassure their investors. It also holds them accountable for all the users, the transactions made on the platform, and the regulations they must follow.
- Customer Support
Your chosen crypto exchange should have reliable customer support where you can inquire about any concerns and receive a swift response. This also shows the exchange’s transparency and willingness to assist and communicate with its users.
Best types of wallets for Bitcoin investment
Having the right wallet to store your invested Bitcoin securely prevents the loss of assets and other breaches. Here are the different wallets available out there:
1. Online or hot wallets
Also known as ‘hot wallets,’ this type of storage can be accessed online using smart devices like computers and phones. It’s a more convenient and accessible way for users to store their cryptos for trading than offline wallets.
However, you should be cautious using wallets like these since they are more vulnerable to online threats like hacking and theft. The best way to utilise online wallets is to trade small amounts instead of storing long-term investments.
2. Hardware or cold wallets
Hardware wallets, also known as cold storage wallets, are not connected to the internet, making them the most secure option against online threats. With a hardware wallet, online hackers cannot gain access/control over your crypto because of the lack of connection.
Moreover, to access cold wallets, you need physical keys that can come in the form of a USB drive or private keys stored in a computer.
3. Paper wallets
Paper wallets are an older form of cold storage used in cryptocurrency’s primary years. Usually, these are papers containing barcodes that can be scanned to access funds.
Tips on Bitcoin investment in Kenya
Here are some of the best practices you can incorporate to invest successfully in crypto:
1. Educate yourself
Successfully investing in bitcoin requires research and a good foundational knowledge of crypto. Learning about different trading styles, market trends, and exchanges will help increase your opportunity for big returns.
2. Start small
Like any other investment, starting small is the ideal way to begin in cryptocurrencies. Experts recommend this to understand the market and learn its movements while low risks remain. Afterwards, you can start working towards bigger returns.
The crypto market is infamously volatile. Because of this, tips from long-time investors involve diversifying your portfolio. This allows you to allocate resources to lessen your losses since you didn’t put all your money in one cryptocurrency.
4. Don’t chase quick profits
Long-time investors know that the road to gaining profit is a long one. When you’re investing in Bitcoin, take it slow. Focus on your progress instead of trying to keep up with others.
5. Stay up-to-date
Staying up-to-date is highly advised because crypto is always innovating and changing. So when investing, it’s important to track the highs and lows to make informed decisions.
Invest in Bitcoin and start your crypto journey today!
If you’re a mindful investor, Bitcoin is a high-yield investment that can promise great returns. Just keep in mind to tread the market carefully and make sure to make informed decisions before shelling out money.
Why invest in bitcoins?
Bitcoin offers investors a way to diversify their investment portfolio and is suited to those with big risk appetites.
How does bitcoin investment work?
Bitcoin investment works by buying bitcoin from exchanges and keeping them until investors see fit to sell.
Is bitcoin a good investment?
Yes. Bitcoin is a good investment for those seeking short-term and long-term gains, depending on your chosen strategy. In addition, it’s highly volatile, so understanding the market is key.
What are the legit bitcoin investment sites in Kenya?
Some of the most popular exchanges that operate in Kenya are Binance, Kraken, and Paxful.