I have been writing about bitcoin, blockchain and cryptocurrencies for close to four years now. For the last two years, it has been my exclusive niche. I have created web content for hundreds of bitcoin/blockchain startups. Many of them pay me in cryptocurrencies (mostly bitcoin and Ether).
I decided to write this short article because of the questions about bitcoin I have been receiving in my inbox, especially in the last two weeks.
The price of bitcoin is over $2000 today (Ksh 200K). In January it was about $1000 (100K). Anyone who bought then has doubled their value.
If you are thinking of making quick money with bitcoin you should be aware of the risks involved. This is especially true because bitcoin isn’t a company so that if something went wrong you will call customer support. Or you will have someone to sue.
The digital currency operates on a peer to peer network. There isn’t a central point for control. And the community around it is made of people from different backgrounds, races, social classes and persuasions. Their interests, intentions and goals are diverse.
Thousands of companies are offering different genuine services around cryptocurrencies. These range from wallets, exchanges, trading platforms, ecommerce shops to mining hardware manufacturers. In the same space, however, scammers and criminals are also trying to make some money too.
As a matter of fact, the cryptocurrency, just like cash, is neutral. There are good as well as bad things done in the name of bitcoin.
If you want to buy bitcoin to test how it works, or use it as a currency to pay for goods and services online, that part isn’t complicated. Choose from wallets listed on bitcoin.org and download to your mobile device or desktop.
You can also download the mobile app wallets from Google Play. The most used include Mycelium, Coinbase, Blockchain.info and BreadWallet. Make sure you read reviews and consider the number of downloads when selecting one to use.
Where you can easily buy bitcoins in Kenya is on localbitcoins.com. This is a marketplace that matches buyers and sellers. When selecting trader to buy from, look at their profile. Select from the ones with the highest number of trades and the highest reputation score.
When you initiate a trade, the seller is supposed to move the bitcoins to an escrow account before you pay them with M-pesa. You will receive a notification that they’ve moved the bitcoins to escrow. Never send M-pesa before the seller puts the coins in the escrow wallet.
Once you pay, the trader will release the bitcoins to your wallet on localbitcoins.com. You will then proceed to move the coins to the bitcoin wallet on your phone or desktop.
However, if you want to trade bitcoins, know that the price of bitcoin, just like that of any other tradable commodity, is affected by both internal and external factors. Your success in trading depends on your understanding these factors.
In the least, you should be aware of the core software development politics, performance of other cryptocurrencies and actions of regulators on bitcoin around the world.
If you don’t follow these trends closely, then you shouldn’t think about trading bitcoin. Instead, spend at least 6 months to one year closely following trends in bitcoin, blockchain and cryptocurrencies in general. It will also help a great deal if you do an online course on forex trading in the meantime.
I see many people asking about mining. It used to be very easy to mine bitcoins in 2010 or 2011. A desktop was all you needed. Right now the mining difficulty is very high and a normal desktop wouldn’t do anything. You will require expensive ASIC mining hardware to match the difficulty.
Furthermore, you need a cheap source of electricity for you to compete with other miners, especially those in China with mining farms covering floors of huge warehouses. In short, bitcoin mining is no longer for any person to do. Those getting into it now are using capital in billions of shillings.
However, some companies have set up mining farms and are selling bitcoin mining certificates-think of them as shares. The problem here is that scammers are also setting up websites and claiming to be running mining farms, which they don’t have. They will sell you fake bitcoin mining certificates through a pyramid scheme. Money from new purchasers is used to pay those who came first as profit.
If you have come across someone convincing you to join bitcoin mining through the mining certificate path, at least consider that it could be a pyramid scheme before you put your money there. So, do a lot of due diligence.
The best thing to do, again, is to spend months to years learning how bitcoin and other cryptocurrencies work before putting your money in.
And always invest what you are ready to lose.