You have to have been living under a serious rock if you haven’t at least heard the term cryptocurrency or Bitcoin mentioned in the last year…
If it is totally new to you, or if you have literally only heard about it, let me give you the shortest possible explanation:
Basically, bitcoin is a virtual currency, a form of electronic money that has a few features that have led to its popularity.
-Blockchain. Basically this is a completely public ledger of every transaction of bitcoin that takes place, meaning that everything is transparent… BUT also somewhat anonymous since its difficult to link a bitcoin address to an individual or company.
-Decentralized. The blockchain is stored on multiply nodes spread across the world. The bitcoin network is not owned or administrated by any central bank or government.
-Peer to Peer. Transactions can be sent directly between users without any third party involvement.
The idea is great, and there are so many positive use scenarios but there are also a few problems…
-Volatility. While this problem actually suits people who are trading bitcoin to make money, it is a massive problem for someone wanting to use it as an actual currency. The price is ALL over the place… IMHO this is the major reason that there aren’t more merchants dealing with bitcoin… take a look at this chart of the price, just over the last month:
-Fees. For a system that it supposed to eliminate the need for a third party, and is somewhat ‘anti’ banks, its way more expensive in a lot of cases. While it may not be the case in other countries, here in South Africa I pay a fixed monthly fee of around R100 on my bank account that allows me to make as many electronic payments and card swipes as I could possibly want to given the amount of money I actually have to spend!
I’m probably making at least 50 transactions a month, meaning for arguments sake I pay about R2 to transfer money to someone…
Bitcoin transaction fees are getting cheaper as people try to fix this problem, but like the value of the currency, they are also all over the place! you could pay US$ 0.15 today and then next week it could be US$ 0.80
-Pseudonymity. While the idea of being able to ‘cut out the middleman’ might seem good, it’s usually only a good idea for people on the extreme right who like Neo, think that the government is just out to control you…
A lot of the time, the regulations imposed by banks are actually there to protect people. There is a reason why Ponzi went to jail for fraud and running a pyramid scheme became a lot harder…
By allowing someone to send an receive payments completely anonymously, Bitcoin and other cryptocurrencies enable SO much scamming, particularly as it has gained popularity in the last few years. Here is an excellent and short article about the iCenter bot on Telegram, but there are literally thousands of these ‘investment’ schemes that are essentially Ponzi Schemes.
SO… nevertheless, being a nerd I have looked in on bitcoin for several years and in the last year have actually taken the plunge to get more involved.
HODL
This is a term which is basically hold mispelled as often happens when typing fast…
The simplest way to ‘get involved’ is to simply buy some bitcoin, and hold on to it as an investment in the hope that if/when you need to cash in, it is worth more than when you bought it…
You could potentially make a lot of money doing this… if you had bought 1 bitcoin in Jan of 2017 you would have paid as little as US$ 800, and if you had sold that on Dec 17th you would have made nearly US$ 19 000 in profit.
Now don’t get too excited though, remember that the price is all over the place! If like me you got in during the bubble and bought (albeit a very small amount) in Dec 2017 then you would have paid US$ 16 000 for 1 bitcoin (Before you knock on my door to ask where I got US$16K… I bought 0.00017883 bitcoin for R50) and you would have lost over US$ 9 000 in value, or like me ~R33
However, if you are interested in buying bitcoin, the simplest way to do it is to use Luno just download the app and deposit what in the crypto world as FIAT currency (ZAR or GBP)
Some coins will actually reward you for just holding them, known as ‘staking.’ Although, many of these do require you to keep the wallet app open and connected to the internet… and they use a LOT of your bandwidth. The one exception I know of is NEO, whoch will give you GAS (another coin) for holding it.
TRADE
The great thing about crypto is that if you want to get into day trading you can do so with much smaller amounts. If you trade forex, there are high fees, minimum balances and deposits etc that make it hard for someone to do ‘on the side’
Using an exchange is also just an alternative and potentially slightly cheaper way to buy bitcoin or other cryptocurrencies known as ALTs
In the grand scheme of things I really know nothing about trading… I mean I get the basic idea of what a candle is and how to adjust the settings for MA indicators and that’s about it..! But I will share a few things that I’ve learnt.
Fees – again you have to watch out for these. Every exchange is different, but there is usually a maker/taker fee, in laymans terms a ‘trading’ fee. Often its pretty small, the standard seems to be around 0.2% but if you use the exchange on Luno for example its 2%. Then there is also usually a withdrawal fee and this is the one to look out for. Basically the higher the value of the currency you are withdrawing the more you pay in fees, so if you want to get money out of an exchange, it is often better to use a cheaper coin like LTC, DOGE or XRP or ADA.
Volume – This is the amount of actual trading that is going on. My advice is to stay away from a) low volume exchanges and/or b) low volume coins/currencies.
Low volume basically means there is not much buying/selling going on and this can cause 2 problems: firstly the price is stagnant and/or completely different to the average price across other exchanges… ZEC on graviex for example has this problem… no one wants to pay the proper price for ZEC on there, so the volume is really low and unless you drop your price you won’t be able to sell…
Secondly it can leave you stuck with a useless coin, unable to sell it. I have this problem with SPL on coinexchange. The price has dropped to the smallest amount allowed by the exchange: 0.00000001 BTC and no one even wants to pay that, so you could be stuck with a bunch of coins that you can’t sell. At the moment there is over US$ 35K in SPL that people are trying to dump on coinexchange…
One other thing to note is that many exchanges have a minimum trade amount, cryptopia for example sets this at 0.00050000 BTC or about US$ 4
Exchanges – There are SO many exchanges, take a look at this list on coinmarket cap
I’ll mention a few that I have used, or have some experience with:
Firstly 2 larger more reputable exchanges…
Binance – Based in china and the highest volume exchange at the moment. Lists many many coins (over 300), but the withdrawal fees can be a bit high…
Cryptopia – Based in New Zealand, lists a huge amount of coins, over 600, but the minimum trade volume has surprisingly annoyed me a few times… for example I have 12.5 Pascal Lite coins that I mined (more on mining later) that I can’t sell because they are way below the limit…
Secondly 3 smaller exchanges, they list more of the newer coins:
Crex24 – Lists a few Masternode coins like MRI that I have on Mintnodes (more on that later too) Simple interface and easy to use.
Graviex – This is the exchange I’ve actually used the most, not that it is an amazing exchange, actually I resisted registering for ages, but it lists most of the cheaper Masternode coins. You can get a 15% discount on trading fees for 30days if you register with my referral code: 198cf9344c5cd4a241e30bfd
Stocks Exchange – They recently overhauled their interface which was a great imporvement since the old one was terrible! I actually have only used them because they list SPK which was the first Masternode I set up.
Lastly, arguably the biggest South African exchange, Alt Coin Trader. They have recently significantly reduced their fees, and unless you are withdrawing huge amounts they are very reasonable…
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