Have you heard about Bitcoin? Do you want to know how to buy and sell Bitcoin in Kenya? If yes, then this article is for you.
What is Bitcoin?
Bitcoin is a digital currency used to facilitate transactions. It belongs to a group of financial assets known as cryptocurrencies. Created in 2009, bitcoin is today among the most lucrative investment assets in the market.
It has become very popular recently due to its price growth. At some point, bitcoin was trading at almost 70,000 dollars. Locally, this amounts to over 7 million Kenyan shillings.
There is still a majority of people who don’t understand what bitcoin is and how you own one. However, Kenya is among the leading countries in Africa on bitcoin adoption.
This can be attributed to various factors including high literacy levels, access to the internet, and favorable government policies.
Just like other investment assets, buying and selling of bitcoin are done online through authorized trading platforms known as brokers.
How Does Bitcoin Work?
Bitcoin is a form of digital money that is created through a technology known as the blockchain. It belongs to a group of currencies known as cryptocurrencies. Some other examples of cryptocurrencies are;
- Ethereum
- Dogecoin
- Ripple
These are just a few out of the more than one thousand cryptocurrencies in existence. Bitcoin is the pioneer and the most valuable cryptocurrency in the market.
It is an alternative to the traditional money we use today such as the Kenyan shilling or the Dollar. The difference is that the money we use is controlled by the government while bitcoin has no one in control.
As such, you can use it to buy goods and services. However, there is not much usage locally as most of the people using bitcoin for transactions are in developed nations.
It is yet to get much acceptance here in Kenya and Africa in general.
How is Bitcoin Created?
Bitcoin creation is done through a process known as mining. The process involves solving set algorithms through the use of computing powers. Once the set criteria are met, then a bitcoin is created.
Mining is one of the processes through which you can own bitcoin. However, it requires a lot of investment to mine. A capability that only a few have.
It requires a huge investment and technical know-how that is almost impossible for an average person to have.
It also has a supply limit of 21 million coins. This means that only this number can ever exist. So far, over 19 million bitcoins are in circulation leaving less than 2 million more to go.
How to Buy Bitcoin in Kenya?
Buying and selling of bitcoin are done through an intermediary or a broker. These are platforms that offer the marketplace where these transactions occur. Brokers bring together buyers and sellers to facilitate transactions.
The number of brokers has been increasing over the years making the buying process easier and more affordable. Below are some of the requirements you need to buy a bitcoin.
- A brokerage accounts
- A digital wallet
- Capital
- Brokerage Account.
This is the account you get when you register with a broker. To open the account, the broker has to verify your identification documents.
Mostly, these include a passport size image, National Identification documents, and proof of residence. Upon verification, the broker proceeds to generate an account for you.
Below are some of the brokers you can buy Bitcoins from in Kenya.
These brokers support bitcoin in some local payment methods such as M-PESA.
You also need to understand that brokers may vary in some aspects such as fees and the account opening requirements.
Hence, you should do some background research to understand the operations of each broker.
- Digital Wallet
Named after the traditional physical wallet, this is the place where you store Bitcoin.You can get a wallet through your broker or other commercial wallet providers. The wallet is a store. You are free to transact from your wallet any time of the day.
- Capital
Capital is the amount of money you need to start investing in bitcoin. Because it is a digital asset, there is no limit to the amount of bitcoin you can buy.
Depending on the broker, some allow purchases from as little as 1,000 shillings. This enables almost everyone to participate in the market irrespective of their financial capability.
If you can manage to get 1,000 Shillings, then you qualify to become a bitcoin investor.
Why Should You Buy Bitcoin?
The major reason why most people buy bitcoin is to cash in at a profit if the price rises. Since its launch, Bitcoin has been recording huge price gains.
As an example, the price of bitcoin was trading at 10,000 shillings in 2013. Currently, the price is trading at 5 million shillings. An indication of how lucrative it is. Everyone who bought at least 1 bitcoin 10 years ago is now a millionaire.
This form of investment is speculation. The future price of bitcoin is not known. However, some analysts predict it could reach higher as more people buy increasing demand.
Some analysts term cryptocurrencies as the biggest wealth creators of the century. This is due to the rapid growth the industry is experiencing. As an investor, such opportunities are rare and hence should be taken.
Risks of Trading in Bitcoin in Kenya
There are risks in dealing with investment assets such as Bitcoin. Among the key risks of trading in Bitcoin is volatility that comes with rapid price movements in the market. If this happens against your trade, it could result in heavy losses.
In extreme cases, the prices can fall to zero. However, this is yet to happen in the market. Other than the price falling, there are other risks of trading online.
Bitcoins exist in digital form making them a target for online attacks. There have been numerous cases of investors losing their investment through online theft.
It is also critical to ensure trading in bitcoin is legal depending on the country you are in. Some countries have banned it. Hence, this is key information to ensure you are investing legally.
The risks of losing money exist in this kind of investment. To mitigate against these losses,
- Only invest funds you are willing to lose – This ensures that you have emotional stability and you can quickly recover in case of a loss. It is also a risk management approach.
- Ensure you have adequate market knowledge before buying. In case you are not sure, you should engage the services of a professional- with the growth in internet adoption, information is readily available for anyone in need. You can also liaise with someone who has already done it before as it saves you a lot of time and resources.
- Have a backup plan in case the market goes against you. Some of these include exiting the market early. It is better to book a small loss than lose the whole investment.
- Use regulated and genuine trading platforms to avoid falling victim to online fraudsters.
- Ensure all the transactions are legal- This requires you to be updated with the regulatory environment. In case of doubts, you should visit the local regulatory offices for clarity. You can also communicate with them through various channels such as email. As a transactional currency, bitcoin activities are regulated by the Central Bank of Kenya.
Regulation of Bitcoin in Kenya
Bitcoin and cryptocurrencies in general have minimal regulations globally. Part of the reason for this is because the technology is new and governments are still trying to understand it. However, some countries have already given specific directives on its usage.
In Kenya, there is little regulation on the trading and use of bitcoin. There are ongoing studies meant to form the basis of regulation but still inconclusive. Hopefully, the first report will be out this year.
Lack of regulation has its advantages and challenges. It is great because it allows innovation and lets market forces determine the price. On the other hand, a lack of the same may allow criminals to operate and facilitate exploitation practices.
In the days ahead, this is likely to change as the market matures and governments finalize the regulations currently under review.
Future of Bitcoin
Based on past experiences, the future of bitcoin remains a wait-and-see issue. Some analysts believe that the price will continue rising in the future. However, some believe it will fail in the long term.
In the meantime, those who did investments in the past have already made lucrative returns. The cryptocurrency industry is growing and continues to expand.
As highlighted, the supply of bitcoin is almost hitting the ceiling of 21 million. Analysts believe that this limitation in supply will be one of the biggest price drivers in the coming years. In general economics, limitation in supply with increasing demand makes the prices rise.
On the price end, analysts predict bitcoin could hit the 10 million shillings price soon. If this happens, all investors buying the coin currently will be in profit.
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