Cryptocurrency trading involves buying and selling cryptocurrencies to profit from price differences. But that only scratches the surface of this whole new industry. In this guide, you will learn how to trade cryptocurrency in Africa, the trading types you can venture in and where to buy and trade depending on your country.
Find out everything you need to know at Crypto in Afrika to make the most out of every investment opportunity in the continent.
What is crypto trading?
Crypto trading is the act of trading virtual currencies online to profit. By anticipating the rise and fall of cryptocurrency values, traders can gain short-term or long-term gains. They utilise trading strategies, analyses and tools to buy and sell at the right time and gain maximum profit.
To trade, investors in the market must have cryptocurrency wallets, which are tools to keep public and private keys to access digital tokens. With this, they can purchase cryptocurrency through apps, trade them in exchange platforms and transfer them to other wallets.
Aside from trading, there are also other opportunities in the market, such as crypto gaming, NFTs or digital art and other activities that accept crypto as a mode of payment. You gain access to all these online opportunities when you learn how to start crypto trading.
Cryptocurrency trading types
Learning the crypto trading types is essential before knowing how to trade crypto and where to do it. See the list below to learn more about them and whether or not they’re the right fit for your trading patterns:
One of the derivatives of crypto trading types is a Contract for Difference or CFD. This is a kind of trading method used by experienced traders to speculate whether or not their chosen digital asset will reach a specific value or price amount.
You can think of CFDs as a wager placed in markets. Instead of owning the crypto, the trader works with a broker to predict whether or not their chosen crypto will increase or decrease in value. These terms are used as leverage to determine profit returns or profit losses as a result.
- Crypto exchanges
The most common type of crypto trading is a crypto exchange, where you own digital coins. Compared to the CFD option, where you don’t need to hold cryptocurrency to profit, you need to create an account and purchase digital currencies to exchange and profit. You will have to create and link a crypto wallet and use this to administer trades within the crypto exchange or to other channels.
Since it’s easier to understand, it’s more suited for newbies only starting to learn how to trade with cryptocurrency. Crypto exchange sites also offer to learn materials to help beginners get the hang of crypto trading rules, tips and strategies.
How Does Crypto Trading Work?
When you trade crypto online, you exchange your coins for other assets in a decentralised market. No central bank oversees every transaction to make sure they’re veritable. Instead, a decentralised network of nodes cross-checks a digital ledger called the blockchain, which records every crypto transaction to guarantee that the transaction is legitimate.
The blockchain verifies the transaction, such as the amount sent and the sender and recipient addresses. Once verified, the transaction goes through, and all data is recorded permanently on the blockchain. It then becomes immutable and can’t be changed, which makes it secure despite its decentralised nature.
This is just the underlying concept that happens in every trade. You’ll need a crypto wallet and an exchange platform to exchange crypto. Learn more about these in detail and how to start trading crypto below:
- Using crypto wallets
You will need a cryptocurrency wallet to trade or transfer the ownership of coins. This storage type holds essential information for trading, such as your public and private keys. These keys are needed to access your digital currencies on an app or exchange site.
These wallets create the receiving or sending addresses you need to trade. So before you can send or receive digital assets, you must first create a crypto wallet and link it to your exchange site or online platform. You can also make purchases online and use your crypto wallet for various options as long as merchants support them.
- Trading on an exchange platform
Cryptocurrency trades occur via a cryptocurrency trading platform. Here, traders can enter and exit positions on the market to buy and sell cryptocurrencies. They post orders the platform carries out by matching them to a satisfying bid.
Whether you consider yourself a buyer or seller in the crypto market, an exchange site has plenty of tools and investment opportunities for every kind of crypto trader.
Crypto trading for beginners: Where to trade crypto
Out of all the African countries, South Africa, Nigeria and Kenya stand out as the best up-and-coming locations for thriving African crypto investors. Find out where to start trading in the coming section:
Crypto trading: South Africa
The mass adoption of crypto in Africa has paved the way for investors, especially those in South Africa, to buy and sell cryptocurrencies for additional income. Though the South African Reserve Bank (SARB) warned investors about the risks of crypto trading, it hasn’t stopped many from learning how to start crypto trading in South Africa.
This eventually led to the country’s Financial Sector Conduct Authority (FSCA) officially classifying digital assets as financial products. Thus, they are now regulated and covered by the law.
Some of the best and most trusted crypto exchange platforms in South Africa include Coinbase, Binance and Kraken. All three platforms offer competitive fees ranging from 0.1% to 0.26% and features such as crypto loans, margin trading, mobile applications and trading pairs ranging from 400 to 1,447.
Crypto trading: Nigeria
With the perpetual cryptocurrency spread in Nigeria, many turned to crypto platforms and merchants to learn crypto trading and get quick profits. Now, the country has one of the largest numbers of crypto investors in Africa, despite the Central Bank of Nigeria (CBN) prohibiting banks and financial institutions from dealing with cryptocurrency. This hasn’t stopped Nigerians from learning to start crypto trading in Nigeria and trading crypto as they wait for regulations.
Paxful and Luno are by far the most popular exchange sites in Nigeria. Paxful is one of the best peer-to-peer networks that allow traders to purchase crypto from other investors online. On the other hand, Luno is popular for beginners and features fees as low as 0.0002 BTC.
Cryptocurrency trading in Kenya
With over 4 million Kenyans owning cryptocurrency and learning how to start crypto trading in Kenya, the country leads the continent in crypto adoption. Though still unregulated, the Kenyan crypto market continues to grow like in other African countries.
Both small traders looking for cheap transfers and quick returns and savvy investors looking to preserve their savings turn to crypto. Despite the Central Bank of Kenya (CBK) warnings about its risks, they do this. United Nations Conference on Trade and Development (UNCTAD) links exchanges’ low transaction fees, fast remittance rates and internet accessibility as the reasons behind the country’s steady crypto adoption rate.
To begin trading crypto in Kenya, choose the best exchange platforms, Capital and Pepperstone. Both sites are known for their excellent security and customer service on top of their features. These include mobile applications, paper trading, zero trading commissions, up to 10x leverage of crypto assets, and so much more.
How to trade crypto for beginners
Learn how to trade crypto and become a digital asset trader in no time with the guide below:
- Choose a cryptocurrency to trade
The first step lies in choosing the right cryptocurrency to start with. If you don’t have a preference, you can go with some of the most common and popular digital currencies, such as Bitcoin (BTC), Ethereum (ETH) and Binance Coin (BNB), to name a few. Once you have decided, you can get started with the trading process!
- Find a reliable exchange platform
Next, find a legitimate and reputable exchange platform of your choice. Consider the supported trading pairs and see if your chosen asset is included. Some of the most popular in Africa include Luno, LocalBitcoins and eToro. Browse through them, then choose a website you believe fits your trading preferences and sign-up for an account!
- Create an account
Once you have chosen an exchange platform, you may now sign-up for an account. Input the necessary details required by the site and undergo the verification process. You’ll be asked to verify your account by clicking a link sent to your email, inputting a code or uploading a government-issued ID.
- Deposit funds into your account
After creating an account, you can deposit at least the minimum amount into your trading account. Take note of the various payment methods supported by your exchange platform because some allow digital assets while others allow fiat currencies via bank deposits and credit cards.
Additionally, the online wallets in exchanges are custodial, meaning they keep your public and private keys for easy access. However, this puts your funds in a vulnerable position in case of exchange hacks, so beware of depositing large amounts. Only deposit what you can trade, not all your crypto investments.
- Trade crypto
Finally, you can now trade crypto. For spot trading or ‘on the spot’ exchanges, place market or limit orders on the trading platform by entering the amount you want to buy or sell. Once posted on the order book, the exchange will automatically connect you with a matching offer. And once you go through with it, the funds will be transferred to or from your crypto wallet account.
Why should you trade cryptocurrencies?
The crypto market offers plenty of benefits to traders, such as a completely transparent, anonymous and decentralised network. You can administer trades anytime, anywhere, with minimal fees and use your crypto for all transactions. The possibilities are endless, from trading with other investors to purchasing NFTs or online gaming.
Although cryptocurrencies pose risks for every trader, the same can be said for all other investments. Once you see the value in the market and get the hang of trading digital assets, you can steadily make profits.
Learning how to trade cryptocurrency is easy and potentially profitable as well. If you are new to the crypto market, it’s one of the financial opportunities worth trying, especially if you are looking for a new and rewarding investment.
FAQs on cryptocurrency trading
How risky is cryptocurrency trading?
Crypto traders must know that all investments pose risks; the same applies to the crypto market. Trading with digital assets is risky due to its high price volatility and lack of government regulations that protect consumers. This means your investments can drop in price overnight, and you may not have insurance to cover your losses.
However, you can prepare for this by diligently watching over your funds and posting stop-loss orders that automatically liquidate your funds when an asset hits a specific price.
Is crypto trading legal in Africa?
Yes, cryptocurrency trading is legal in East and Central Africa. South Africa, Kenya and Nigeria are some of the top crypto markets in the continent and the world.
Is cryptocurrency trading regulated in Africa?
Most countries in Africa are yet to regulate crypto trading. Only South Africa has acknowledged digital currencies as financial products that can be traded, which makes them regulated. Exchange platforms have to follow government regulations to protect investors.
What does ‘trade’ mean in cryptocurrency?
Trading in the crypto market means administering transfers from one account or wallet to another. This can be done with fellow traders, exchange platforms and other online sites that support cryptocurrency. The sender will input certain details of the transaction and transfer funds from their wallet to the receiving account.
How much to start crypto trading?
Trading cryptocurrency is easy and affordable, and it is not only meant for the rich, as some misconceptions state. You can begin trading in crypto exchange sites with around $5 or $10 minimum. However, keep in mind that minimum deposit amounts may vary depending on the platform you are using.
What crypto trading platform has the lowest fees?
The transaction fees of crypto exchange sites vary, and you can minimise your expenses by looking for the ones that have lower fees. These include Pionex, CoinSmart, Binance, Crypto.com and Bybit, which enforce transaction fees as low as 0.05% for each trade.