A lot of South Africans are now interested in buying an investing in Bitcoin. Bitcoin has produced a lot of multi-millionaires overnight from South Africa and across the world. This is a step by step guide on how to invest in Bitcoin in South Africa.
What is bitcoin?
Bitcoin is a form of decentralized digital currency. This is currency that is not controlled by any government or banks. There is no central place that controls Bitcoins, it makes it easier to transfer money across the whole world. Bitcoin was created in 2008 by an unknown group or person using the name Satoshi Nakamoto.
It can always be exchanged for any currency, the value of Bitcoin as of 2020/11/05 is R231 488,73. However, it was not always this valuable, it started picking up value in 2013 as more people found its appeal. A Bitcoin holder once exchanged 10 000 Bitcoins for pizza back in 2010, that would be hundreds of millions today.
Due to its decentralized nature, it is very difficult to monitor the people transferring money using Bitcoins. The only thing that is available is the details of the transaction but the identity of the people behind the transaction is hidden.
What to know before investing in Bitcoin?
Bitcoin is a very volatile currency, more volatile than any other currency, the price swings up and down. This volatility might work in your favour or against you, it is very difficult to speculate on the price of Bitcoin. Investing in Bitcoin is different from trading Bitcoin.
Investing usually means that you believe in the future of Bitcoin and that it will gain value as time goes on. You might believe this because of your foresight into how the future might look like as more stores accept Bitcoin as payment. Bitcoin traders only trade the movements of Bitcoin, they can either short or sell it, they don’t buy Bitcoin directly but only trade its movements. This allows them to make a profit even when the value of the Bitcoin goes down, that’s if they predicted that it will go down.
Investing in Bitcoin requires patience from your side, you have to buy a Bitcoin then hold it, then sell it later when it gains value. Trading Bitcoin is not too different from trading Forex. You don’t need to have R200 000 to invest into Bitcoin, you can usually buy a piece of a Bitcoin (not a whole Bitcoin) for way cheaper. From as little as R1 000.
How to buy Bitcoins in South Africa
This is a guide on how to buy Bitcoins if you are from South Africa. Buying Bitcoin is not complicated.
1. Open a Bitcoin wallet
A bitcoin wallet stores all your Bitcoins, you will get a private key to use for accessing your wallet. Losing this key means that you would have lost all the Bitcoins in your wallet. The wallet makes it easy to buy, sell and store your Bitcoins.
There are different types of Bitcoin wallets, some are safer than others, it is possible to store your Bitcoin wallet offline. This is recommended when you have a lot of Bitcoins, online wallets are vulnerable to hacking. But that’s something you should not stress about, there are reputable online Bitcoin wallets like Luno, that are used in South Africa.
You will be required to produce some form of identification when opening a Bitcoin wallet, usually your ID document.
2. Payment method
You have to choose your preferred way to buy Bitcoin, you can use PayPal, or a credit card, debit card. Bitcoins can be bought from a Bitcoin Exchange, which acts as trading platform. This is where Bitcoin sellers and buyers meet. Different payment methods will incur different charges in fees. You are likely to pay more in fees if you are using a payment method that is reversable like PayPal.
3. Bitcoin Exchange
A Bitcoin exchange is where Bitcoin sellers meet buyers, transactions are performed almost instantly. Sellers place the price at which they are willing to sell their Bitcoins and buyers take them up on their offer. Similarly, buyers place the price at which they are willing to pay for a Bitcoin and exchange with sellers that are willing to sell at that price.
This all happens in a matter of seconds; you don’t get to communicate with Bitcoin sellers on a personal level. The only thing that you interact with is a computer (mobile) screen. The Bitcoin exchange usually charges you certain fees for facilitating these transactions.
Experts recommend that you remove your money from the Bitcoin exchange as soon as the transaction is completed. Exchanges are regularly targeted by hackers and over R16 billion has been stolen from Bitcoin exchanges, mismanagement may also affect your Bitcoins. Transfer them to your wallet as soon as you are done with the transaction. Luno is a very reputable Bitcoin exchange in South Africa.
4. Bitcoin ATM
Another alternative is to buy Bitcoins from a Bitcoin ATM, there are currently less than 10 Bitcoin ATMs in South Africa, mostly in big cities. This makes it difficult for anyone to be able to locate these ATMs and use them.
5. Live transfer
Another option is to find someone who has Bitcoins and meet them in person to buy the Bitcoins. This is something that can turn out to be a scam or dangerous. Always meet in a public space and make sure that you only transfer the money after you have received the Bitcoins.
Conclusion
This was a guide on how to invest in Bitcoin in South Africa. Do you have any thoughts or questions? Comment below.
