It was 2014; I was an undergraduate in a federal university in Northern Nigeria. We had just finished lectures, and I was waiting for a friend under a tree when Ben, one of my coursemates, approached me. This time, he didn’t come to tease me about my girlfriend like he used to. He had come to ask me if I had heard about the “next cool thing” – cryptocurrency. Call that my introduction to crypto.
Many years down the line, crypto is a lot more popular and changing the way we spend, save and invest money.
This is most likely not your first time hearing about cryptocurrency, as it is now a household name. However, findings show that most people only know the word but don’t fully understand crypto and how it works. Therefore, read on to find answers to all your questions about cryptocurrency, how you can make money from it, and how to invest in cryptocurrency.
What is Cryptocurrency?
Crypto or cryptocurrency is a digital currency with which you can buy goods and services but has strong cryptography to secure online transactions and makes use of an online ledger. Indeed, that’s a lot of grammar there. So, to put it simply, crypto is a digital currency that’s independent of regulation, universal, and offers a wide variety of options to its users.
According to Investopedia, there are currently about 6,500 cryptos. You may not understand how crazy that is until you compare it to the fact that there are only 180 conventional currencies.
But the number notwithstanding, the most valuable and popular crypto is still Bitcoin was the first cryptocurrency and was created in 2009 by a man using the pseudonym Satoshi Nakamoto.
How does Cryptocurrency work?
The technology behind cryptocurrencies is called a blockchain. Blockchain technology is a decentralized storage and transaction management system spread over many computers. One of the main attractions of this technology is its security.
How to Invest in Cryptocurrency in Nigeria
As you may have seen by now, cryptocurrency is one of the best inventions (or innovations if you like) of the last couple of years. But what steps do you need to take to start making money from crypto?
The price of crypto changes rapidly, and this is the most common way of making money from digital money. All you have to do is buy when the price is low and sell when it’s high. There are a lot more things involved with that seemingly simple process, but take these four steps to begin:
Chose the Right Crypto Exchange
This is where it begins. Well, thank God you found this; I wasn’t as lucky. I remember losing some money to the first crypto exchange I was using before moving to another one. Let’s not mention names.
Crypto is a bit frowned at by regulators in Nigeria, and that means no one is regulating the activities of crypto exchanges. The implication of that is they might get away with anything.
There are lots of crypto exchange platforms out there. Just find the one you vibe with and register with them. Some of the popular ones out there include Buycoins, Binance, Coinbase, Luno, among others.
Open an Account
You are almost a crypto trader; you just need to open an account with the chosen exchange. It’s just like opening an account with a bank. You will have to provide your credentials during registration, based on what services you opt for, how much you plan to invest, and whether you wish to trade different coins.
Fund Your Account
To purchase cryptocurrencies, you must transfer funds into the crypto-trading account you’ve opened. You may move money from your standard bank account into your crypto exchange. But the only way to fund your crypto exchange account in Nigeria is through peer-2-peer.
Buying and Investing in Cryptocurrency in Nigeria
After funding your account, the next step is buying a cryptocurrency of your choice. This is where it gets tricky because how can you tell which of the over 6,500 coins would rise or fall?
Well, you are simply going to do some research, follow professionals in the trade on social media and read on different cryptocurrency stocks to make informed decisions. Notwithstanding, a good place to start is focusing on the top 10 cryptocurrencies.
Using their current market capitalization, nerdwallet compiled this list of the top 10 cryptos in the world:
- Bitcoin – $891.5 billion
- Ethereum – $380.8 billion
- Cardano – $71.2 billion
- Binance Coin – $69.5 billion
- Tether – $68 billion
- XRP – $47.5 billion
- Solana – $45.6 billion
- USD Coin – $31.7 billion
- Polkadot – $30.7 billion
- Dogecoin – $28.2 billion
How to mine Cryptocurrency
Bitcoin mining is the process of creating new bitcoins. Also, it is a method of confirming transactions and a critical component of maintaining and developing the blockchain ledger.
“Mining” is done through the use of sophisticated hardware that solves an incredibly complex computer math problem. Consequently, the next block of bitcoins is awarded to the first computer that finds a solution.
Mining cryptocurrency is time-consuming, expensive, and only occasionally rewarding. Nevertheless, mining appeals to many cryptocurrency investors since they are rewarded with crypto tokens for their efforts.
Here is an attempt to summarise all you need to know about crypto mining:
- It is possible to earn cryptocurrency without ever having to pay for it through mining.
- Bitcoin miners are rewarded with Bitcoin as a reward for finishing “blocks” of verified transactions, which get added to the blockchain.
- In mining, the reward goes to the miner who first discovers the solution to a complex hashing puzzle. The probability that a miner will solve the puzzle is determined by the share of the total mining power on the network.
- Mining rigs require GPUs (graphics processing units) or application-specific integrated circuits (ASICs).
Cryptocurrency is excellent and all, but you must be cautious, especially if you are new to the trade. Learn from professionals, but also do your own research. Come up with a strategy of your own that will always guide your buying and selling decisions.
Don’t get greedy and follow your instincts. Finally, avoid pyramid schemes disguised as crypto investment or trading (by their promises of excessive profits, you shall know them). Good luck.