INTRODUCTION
This should have been titled ‘Everything you need to know about cryptocurrency’ but for the sake of familiarity, we used bitcoin just to get your attention.
So - Bitcoin! Bitcoin! Bitcoin! That’s the new buzzword in money markets. Some people have all sorts of theories about the value and use of bitcoin. Many are talking about it; some boast of being ahead of everybody when it comes to the trade, and the usual some remain indifferent onlookers as the financial world changes around them.
When many people hear of bitcoin, the first thing that comes to mind is likely that it is a means of getting some fast cash. The entire world seems to be in a rush to get paid. We can tell by the popularity of the 20 for 80k scheme that everyone was trying to get the 411 on at the start of this year.
So what exactly is a bitcoin? Bitcoin is a digital (crypto) currency created in 2009 by the mysterious computer whizz using the alias Satoshi Nakamoto; mysterious because no one actually knows the true identity of Satoshi Nakamoto till this day. It is an electronic form of currency that has no physical presence anywhere in the world. The main idea behind its creation is to have a decentralized form of money; where no particular group of people or government can control its supply and demand.
What makes bitcoin so special? Bitcoin is special because it was the first crypto currency, and it was the first to use a type of technology called “blockchain” technology, which we will discuss in depth in part two of this series.
One way of making money or owning Bitcoins is to become a miner (which we will talk about in the next series). Another way you could make money from bitcoins is by trading them. Buying low and selling high, just as investors do in the stock market. The primary reason bitcoin’s price is going up so much is just due to the law of supply and demand. Many people are buying the coin thus driving the price up, whereas the supply of bitcoins is limited.
How to trade in bitcoin? The diagram below shows you how you can trade in bitcoins. The process is straight forward. You move money from your bank account to your wallet, just as you do for any physical currency, then you move the coin from your wallet to a crypto currency exchange where you can buy the digital currencies you want. A digital wallet is just an application where you can store your money; a similar concept to your physical wallet. Obviously you need to create an account and/or download one of the wallets such as Coinbase. There are more than 1,300 crypto currencies in existence now, and bitcoin is just one of them.
Now that we have basic understanding of bitcoin and its technology, what does this mean to us Cameroonians? How can we participate in this digital currency revolution? The caveat with trading bitcoins in Cameroon is that some of these platforms listed above such as coinbase are not accessible to someone based in Cameroon. So if you have to trade from Cameroon, you need to have a wallet that is accessible in Cameroon then work with your bank on transferring funds from your account to that wallet.
Once the money is in the wallet, you can trade in most crypto currency markets because at that level you are trading in bitcoins and not in XAF (CFA). In Africa, there are four major crypto currency markets to trade in bitcoins which are Luno, BitcoinFundi, ice3x and NairaEx. Given the fact that bitcoin is relatively new, especially in Africa, the bitcoin startups are mostly based in Ghana, Nigeria, Kenya, and South Africa. Trading from Cameroon is still at its infancy and most people trading from Cameroon do it through intermediaries in other countries.
Before doing any trade always read the disclaimers and fine prints on any platform, because if you do the wrong thing you can lose all your money. That being said, there is a lot of money to be made in this crypto currency world. The coins are very volatile. In 2016, a bitcoin was worth less than $500. In January 2017 a Bitcoin selling at $900, by October it climbed to $6000 and on the 18th of December 2017, it peaked at $19,205. On January 14, 2018 a bitcoin was worth $13,695.
You can do the math and go back even further and see how much money you could have made if you were an early investor. Since bitcoin is overcrowded, there are new currencies that have potential. The top 3 currencies for new traders to invest in are NEO, Ripple, and Cardano. Bitcoin, Ehterium, and Litecoin are already overcrowded.
Stay Tuned for PART TWO.
- FBGEOFF feat Tino Foy