This article mainly answers three questions that beginners are generally concerned about and it is one of the best Bitcoin investment guides for Nigerians. The three questions answered in this guide are:
- What is Bitcoin?
- Is Bitcoin a good investment now for Nigerians?
- How do Nigerians invest in Bitcoin?
1. What is Bitcoin?
First of all, let us know what Bitcoin is and how it works. Wikipedia’s definition of Bitcoin: ” Bitcoin is a digital and global money system currency. It allows people to send or receive money across the internet; even to someone they don’t know or don’t trust. Money can be exchanged without being linked to a real identity. The mathematical field of cryptography is the basis for Bitcoin’s security.”
Well, you as a beginner, especially in Nigeria where there is a wide ignorant on what Bitcoin is and how it came to existence, you may find Wikipedia’s definition somewhat confusing. Don’t panic, let’s start with the background of Bitcoin’s invention. Let’s think about it. What are the characteristics of banknotes used in real life?
In fact, banknotes also evolved from physical currencies (shells, daily necessities, gold and silver, etc.). The prosperity of the commodity economy forced the medium of exchange to evolve from physical objects to banknotes that are easy to circulate and manage.
The reason why paper money can be circulated as a medium of exchange is because of the national credit endorsement. With the development of internet technology and the popularization of electronic devices, banknotes also tend to be replaced by digital currencies that are easier to manage and circulate.
Assets will exist in digital form on the servers of major banks and centralized settlement centres, and asset revenue and expenditure will only be reflected in the increase or decrease of numbers on these servers. The account book that records income and expenditure is actually managed by the state or settlement centre.
So is this account book safe? Not really. The country’s war, the destruction of the settlement centre, and the country’s economic sanctions will all affect its security.
In 2008, when the financial crisis broke out, the US government adopted a series of fiscal policies such as additional currency issuance in order to relieve the crisis. Many other countries have followed suit. The issuance of additional currency will obviously cause the currency in circulation to depreciate, and the majority of working people will be affected.
At this time, someone named Satoshi Nakamoto wrote an article ” Bitcoin: A Peer-to-Peer Electronic Cash System “, explaining a completely decentralized payment system. This system has the characteristics of completely open accounting rights, a fixed amount of currency, anonymous transactions and immutability. That was how Bitcoin was born.
It is also good to note that:
- Bitcoin cannot replace legal currency in the short term (the Nigerian government or various countries will not allow this to happen)
- No one or organization can eliminate Bitcoin (you can send and receive bitcoin where there is internet)
- Bitcoin will become more and more precious (the total amount is limited and constantly burned)
2. Is Bitcoin a good investment now for Nigerians?
First, let me say this: it is not completely legal to invest and trade Bitcoin in Nigeria. Not that it is a crime to trade or hold Bitcoin or any other cryptocurrencies, but the Nigerian financial law or policies does not back them.
Even as the Central Bank of Nigeria (CBN) warns against investing in Bitcoin, trading and investing in this coin is completely allowed but not backed by any law in case of loss. In fact, many Nigerians have turned millionaires from either investing or trading these virtual currencies.
China has issued several regulatory policies for virtual currency investment; the main purpose is to regulate the new trading market and trading behaviour and to combat criminals who engage in speculation and fraud in the name of blockchain.
The real development of innovative blockchain technology is encouraged, and virtual currency trading markets are also allowed within the regulatory framework. Individuals holding and investing in Bitcoin and other mainstream virtual currencies are completely compliant and legal. So, Is Bitcoin a good investment now for Nigerians? I say a big ‘YES’to that.
Bitcoin is a very good investment target for the following reasons:
- Bitcoin property is completely private, and no one can forcibly embezzle it, but the legal Nigerian money in your bank account may be frozen by the government at any time.
- The total amount of Bitcoin is constant, and as the private key is lost, the actual circulation will decrease. Fiat currency is always being issued. Comparing the purchasing power of N1,000 Naira ten years ago and now, you can see how it is good to save your hard earn money in bitcoin.
- Bitcoin circulates freely and is not affected by wars, natural disasters, economic sanctions and other factors. The current Naira to Dollar exchange rate is extremely high now and the Nigerian economy going down on daily basis as a result of the global current global pandemic.
3. How do newbies buy Bitcoin?
Early transactions in the market were completed in an over-the-counter trading group, and the group owner guaranteed the safety of the transaction and charged a high percentage of commission fees.
As the world advanced and more technologies that make life easy cropped up, many cryptocurrency exchanges were launched where you can trade and invest in Bitcoin, Ether and other coins and tokens for a fee.
We have taken our time to compile a list of top 5 crypto trading platforms with less transaction fee you can start with.
Cryptocurrency exchanges maintain operations by extracting trading commissions. The trading volume in the bull market is huge, and many small exchanges can indeed get a slice of the pie, but in the bear market, the trading volume of these small exchanges has shrunk severely, and the commission income from the commission cannot support the operation of the platform at all.
So the bear market from 2018 to the present has already brought down many small exchanges. Beginners to the crypto world must stay away from small exchanges when entering the market. The risks involved in investing or trading in such exchanges are high and you may end up losing your life savings.
Currently, most Nigerian crypto traders or investors mainly use Binance, Coinbase, Luno, and Quidax. These four crypto exchanges are really trusted and easy to use for the following reasons:
- Support Naira trading, suitable for beginners
- Low commission rate which can reduce transaction costs
- Large transaction depth, good liquidity, suitable for big money
- The server is safe and stable, and you can cancel any pending transaction without sweating for it.
To start investing in Bitcoin, simply start with Binance exchange.
4. Bitcoin investment risk
Bitcoin price is highly volatile, and altcoins are even worse. Beginners are advised to take note of the risks involve and carry out their market research before investing in Bitcoin.
These are few advice we have for you:
- Always use idle money for this investment and make sure you buy to invest for long-term, not daily trading.
- Stick with only Bitcoin for now, not altcoins.
- Only go for the big cryptocurrency exchange platforms, and stay away from the small and new exchanges.
I wish everyone a smooth Bitcoin investment and financial freedom soon. If you have any questions, don’t forget to drop them on the comment sections below.