beginners guide to investing in cryptocurrencies

I am very excited to be writing this article. I have partnered with a very good friend of mine, Michael.

He is a cryptocurrency investor right here in Kenya. He also guides newbies into the world of cryptocurrency investments.

Personally, he has given me a few lessons on the subject and honestly he’s very good at it.

Hopefully, this article will serve as an ultimate beginner’s guide to investing in cryptocurrencies in Kenya.

So first things first, what is a currency?

Currency is anything with an agreed-upon value that can be used or spent in exchange for a good or service.

There are several types of currencies. Some currencies include fiat, metal or mineral currencies, and cryptocurrencies.

Fiat currency is the money we mostly use. It is issued and controlled by the government, through the central bank.

Therefore, its value can be said to controlled by the government.

Metal or mineral currencies are rare substances used as currencies for example gold, silver, diamonds.

Whereas cryptocurrencies are digital meaning that they only exist in a computer network. some cryptocurrencies include bitcoin, neo, tether, Loki, ethereum, and so on.

Cryptocurrencies are decentralized meaning that no single person or organization determines it’s supply and demand.

This type of currency works on a peer to peer network.

an image of bitcoin

Unlike fiat currency, cryptocurrency’s supply is not controlled by external factors.

Rather the currency itself controls its supply. Just like fiat currency, cryptocurrency is kept in a wallet.

This wallet has an address where your money is sent to or from.

The wallet has two keys. a public key which is used to confirm that you have executed a transaction.

The second key is a private key which is used to authorize and sign transactions.

There are two types of wallets. An online wallet and a hardware wallet.

If you have many coins, that is virtual coins, you can store them in something that resembles a flash disk away from hackers on the internet.

An online wallet is a software that stores your money online.

You might be wondering whether these virtual coins earn interest when stored in a wallet. The answer is yes, some like neo currency actually earn interest.

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HOW TO SEND AND RECEIVE CRYPTOCURRENCY COINS

If you’d like to send bitcoins to me, for example, you’d need my wallet address. Depending on your wallet provider you may enter a pin or simply just send.

Then you’ll need to pay a small network fee. This fee depends on the type of coin that you’ll be sending. Some like Eos have a small to zero fees.

Therefore, enter the wallet address of the receiver. Then verify the transaction by entering a pin or password.

After this, the transaction is posted on the bitcoin network (Blockchain) in the form of an equation known as an algorithm.

This equation is solved and recorded in a ledger by a running computer.

The number of calculations a computer can do is measured in hashes.

A ledger, just like in accounting, is a book where all the transactions are recorded. The computer also receives the network fee that you were charged. The money is then received in my wallet.

You might be wondering how long a transaction takes. A transaction takes 0.1 to 30 seconds.

This however depends on how busy the network is. It might be worth mentioning that the speed at which a computer works is measured in hashes per second.

The smallest amount of sending able bitcoin is called a satoshi.

an image of a bitcoin coin

How many bitcoins are equal to one dollar?

The value keeps on fluctuating but as per the time I am typing this article, the dollar was at 9780. Before that, the dollar had hit 10080 and eight hours later it had fallen to 9578.

You might have heard about a blockchain. A blockchain is formed when a group of computers store and update data.

Earlier on we mentioned that computers are needed to solve equations.

What we didn’t mention is that the people who work behind these computers are called miners. Miners play several roles.

ROLES OF MINERS.

1. Miners handle transactions.

They also keep a fraction of the bitcoin ledger.

2. Miners add successful transactions to the ledger, therefore keeping the ledger updated.

I bet it is worth mentioning that miners are paid the transaction fee plus a fraction of the new coins depending on the number of hashes he has produced against the total amount produced by the entire network.

Apart from miners, there is another group of people called master nodes. Master nodes are people who keep a copy of all bitcoin transactions.

A node is therefore simply a copy of all bitcoin transactions.

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ADVANTAGES OF BITCOIN
  1. Because it is decentralized, the government and other organizations cannot monitor your finances easily.
  2. It is faster,
  3. It has low transaction fees
  4. Has worldwide use.
  5. Allows anonymous payments like payment to VPN services, subscriptions to websites, and organizations. Is this a good thing? I’ll let you be the judge.

DISADVANTAGES

  1. Untraceable: unlike mpesa once you get a wallet address wrong that money is lost.

To remedy this the system keeps a record of every purchase and withdrawal.

  1. Converting cryptocurrency into fiat is expensive.
  2. It has not yet been fully accepted
  3. It requires a good understanding of computers
  4. Once you send digital currencies over a long geographical area, the recipient will only access this currency after 48 hours. Though they will have been notified about receiving this currency.

Below are a few websites where you can get the history on cryptocurrency coins

www.coinmarketcap.com, www.coingecko.com

in case you are wondering where you can exchange your fiat currency into cryptocurrency or vice versa, here are some places to do just that.

Paxful and local bitcoins, coin base, binance to name but a few.

I’ll have to warn you that converting currencies can be a little bit expensive depending on the country.

SECURITY

an image of the word security

As mentioned earlier, cryptocurrencies are decentralized. Unlike fiat currency which is stored in banks where it can be stolen.

You’d have to hack each and every computer that is used to mine in order to steal cryptocurrencies.

Another security issue is concerning fraud. in this case double-spending.

That is paying off two checks with insufficient funds in the account.

With cryptocurrencies, it is impossible to double spend. this is because a balance can’t overdraw and transactions are instant.

an image of crpto coins

HOW TO MAKE MONEY IN THE CRYPTOCURRENCY WORLD?

As expected you are reading this article so as to learn how to make money or simply to gain knowledge.

Below are a few ways to earn money.

1. Long term investing

Just like other types of investments, one can buy cryptocurrency coins and hold for a very long time. Only to sell them at a higher price.

  1. day trading

This is whereby one buys and sells coins multiple times in a day. As a rule of thumb always buy low and sell high.

  1. mining

Just as mentioned earlier, miners solve equations and get paid for doing so. This can be a lucrative way of earning.

  1. Initial public offer. (ICO)

This is whereby you get coins before they are offered to the general public.

One can get these initial coins by buying them or as a gift when you join a program.

Ethereum, a type of digital coin, has random giveaways based on the ethereum blockchain known as airdrops.

These coins however can take several years before they mature, so don’t just join any program, look at the most promising programs.

  1. Faucets

These are websites that pay users small amounts of money to complete tasks such as watching adverts and completing surveys.

And of course, you’ll get paid in crypto coins.

  1. Developing blockchains

Just like wed developers, you can earn money by developing blockchains on platforms like ethureum and neo.

You can also earn from displaying adverts on your blog about cryptocurrencies.

For more ways on how to make money using cryptocurrencies visit https://www.mitrade.com

You can also stay tuned for an in-depth article on how to make money with cryptocurrencies.

As I pen off, I’d like to thank you for reading until the end.

As a word of caution the cryptocurrency market is still highly volatile. Therefore, only invest in what you can stand to lose.

As always invest in knowledge first before investing your hard-earned money.

If you’d like a mentor to guide you through the process of investing in cryptocurrencies, my good friend would be more than happy to take you under his wing.

So hurry up and sign up in the description box below for his free classes before he starts charging.

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