Over the years, cryptocurrency has grown in popularity amongst investors in the Nigeria. This currency is one of the newest asset classes that provide substantial returns on investments within a short period of time. Whether with a small or huge amount, investing in cryptocurrency is certainly something Nigerians want to look into. Bear in mind that as much as they have the potential to generate huge profits, so also for huge losses.
In this post, we will take look at how to invest and take advantage of the profit potential of cryptocurrency in Nigeria.
Cryptocurrency in short is digital money or currency. This means that it shares the same general purpose as the traditional currency being a medium of exchange, but does not have a physical paper or coin and is not created by a central authority. Much more than a means of payment for goods and services, cryptocurrency is also known as a speculative type of investment asset. Some of the top-performing cryptocurrencies in Nigeria are:
- Bitcoin (BTC)
- Ethereum (ETH)
- Litecoin (LTC)
- Dashcoin (DSH)
- Cardano (ADA)
- Bitcoin Cash (BCH)
- Polkadot (DOT)
- Dogecoin (DOGE)
- Stellar (XLM)
- Binance Coin (BNB)
These digital currencies do not rely on any central authority for verifying transactions or creating new units. It rather relies on what is known as cryptography, a method of storing and transmitting data in a particular form to protect its integrity and prevent counterfeiting.
Cryptocurrency also uses blockchain technology for recording transactions in a ledger system. For this reason, it can not be manipulated or controlled by any single entity.
What to Know Before Investing in Cryptocurrency
It is easy to be carried away with stories of crypto investors that are millions and thinking everyone does. There are also investors have run at an extreme loss because they were not careful enough with their investment.
There are a number of key factors you need to be mindful of for you to invest wisely. These factors include:
- Coin purpose
- Price history
- Diversify your portfolio
- Only invest that which you can lose
Pros and Cons of Cryptocurrency
A lot of people are beginning to realize that investing in cryptocurrency has the potential of generating huge profits. However, there is also the other side of the coin. As much as this digital currency comes with huge advantages, there are also disadvantages.
It is important to be aware of both the merits and demerits of this investment type before you take the plunge. Let us now look at some of the pros and cons of investing in cryptocurrencies so you will gain insights into what you should expect.
- Huge Return potential
This is perhaps one of the major pros of cryptocurrency investments. Cryptocurrency offers a huge profit potential compared to other forms of investments such as stocks; the more its adoption, the stronger its growth and appreciation.
- Highly Secured
Cryptocurrency investments are highly secure, thanks to cryptography and blockchain technology. Since there are no involvements of intermediaries, there can be no manipulation in a transaction. It is safe to say with cryptocurrency, there is no possibility for fraud and scam.
Cryptocurrency makes use of a public ledger known as the blockchain for monitoring and recording every of its transaction made. Once a transaction is made, it cannot be changed. This technology also ensures transparency, as the data is always available to everyone.
- High Learning Curve
The decentralized concept of cryptocurrency that comes with the use of block chain technology is not an easy-to-understand concept. This is especially true for those not familiar with modern technology and how it works. For this reason, a lot of investors find it difficult to trust the cryptocurrency market.
- High volatility
The price for cryptocurrency is highly volatile. This means that you can’t really predict when it will go up or down as it can swing wildly, even on a daily basis. Investors will need to be good analysts and stay up to date with the market’s news and trends, to help you make the right choices of assets to invest in.
Get Started with Cryptocurrency Investment in 3 Steps
Choose an Exchange Platform
To get started with cryptocurrency investment, you need to choose an exchange platform and register. There are a number of them, with each offering different crypto assets and features. You want to consider the reputation of the exchange platform, which cryptocurrencies they have on offer, their fees, security features, options for storage and withdrawal, and possible educational resources.
Some of the top exchanges in Nigeria are:
It is important to note here that an alternative option to exchanges is brokers. For the purpose of this post, our focus will be on exchanges.
Fund Your Account With Fiat
Once you have opened an account with an exchange, it’s time to deposit funds. There are a number of ways you can fund your exchange account in Nigeria. The cheapest and fastest is typical with a transfer from your connected bank account. However, this is no longer allowed in Nigeria because of the recent ban on cryptocurrency by CBN. There are various other options such as P2 and various online payment platform (e-wallets) accepted by your chosen exchange platform.
Enter a Purchase Order
Once your account is funded, and of course, when the moment is right, you want to enter an order. This will require you to select your desired coin such as bitcoin, litecoin, ethereum, and so on, and the amount (of fiat money) you’re willing to spend on the purchase. Once the transaction executes, the fiat currency in your account will turn into your desired currency. This means you are officially a crypto owner.
Cryptocurrency investment is a very rewarding investment. Similarly, it is highly risky and speculative because of its extreme volatility. The implication of this is that anyone looking to invest in this currency should do so carefully and with due caution.
As with any investment, ensure that you only invest what you can afford to lose.