How to Invest in Bitcoin?
It is legal to buy and sell Bitcoin in South Africa. The South African Revenue Service (SARS) acknowledges the trading of Bitcoin and has issued warnings regarding the risks associated with investing in it and has not stated any ban on any form of cryptocurrency trading. However, all earnings made through all trades will be taxed.
Before you get started, as an investor you will be required to have a cryptocurrency exchange account, identification documents, secure internet connection, and a method of payment. Payment methods include bank account, debit cards, and credit cards. It is advisable to use an exchange method that allows you to withdraw your crypto to your personal online wallet for safekeeping. There are two ways that you may consider storing either in a hot or cold wallet. A Hot wallet is a digital crypto that requires the internet and can easily be accessed via a smartphone or a laptop. The downside of this is that your wallet is vulnerable to hacking and phishing. Cols Wallet on the other hand is usually a small object such as a hardware device that does not require the internet to access. This is highly secure and less vulnerable to online attacks.
Coinbase is one of the well-known and the most used cryptocurrency exchange. It has a solid variety of altcoin choices, a much easier interface, and extremely high liquidity.
Best Ways to buy Bitcoin:
1. Mine Bitcoin
Bitcoin mining is one of the toughest jobs but, the brighter side is that it is profitable and if you are technologically inclined you will find the process more interesting. If you opt for this option, you will go through a process called proof of work wherein you will deploy computers in a race to solve mathematical puzzles that verify transactions. The trick here is to keep on solving the puzzles and support the overall system as you will be rewarded with new Bitcoins.
2. Credit Card or Debit Card
You may buy bitcoin using your credit or debit card. However, you will still need to do this process through a reputable Bitcoin exchange such as Luno where you choose your preferred method of payment such as bank transfer or credit card to top up your Luno account. You will have to add your card details and transfer money into your Luno account once it has been verified. When that’s done, you may buy Bitcoin or Ethereum, then securely store it in your wallet or send it on easily to friends. You can earn up to 7.6% on your crypto and your savings interests will be paid in crypto monthly. This means that you will be able to see your crypto balance grow.
3. Be part of a Bitcoin trading community site
With this option, you will have to be very much alert and vigilant as it is very risky. There are very few legit cryptocurrency platforms that offer people who would like to invest the opportunity to connect with other people who are buying and selling Bitcoin privately. You can trade via a reputable website or meet with the person physically to pay for your purchase. Remember, be careful, don’t be a victim of a scam.
4. Get paid in Bitcoin
You can get paid in Bitcoin from PayFast transactions, which is the most popular pay gate. It allows people to pay in Bitcoin which is then converted into Rands.
5. Bitcoin Teller Machine (BTM)/ Virtual Teller Machine (VTM) - Bitcoin ATM
Unfortunately, in South Africa we do not have many BTMs as yet, the ones we have available can be found in the major cities. This is a vending machine that works like an ATM and for you to use it you will have to have a Bitcoin wallet loaded on your Smartphone which generates a QR code that the BTM reads. This machine can be used to deposit funds to purchase Bitcoin, however, it can not be used to withdraw the money made from selling Bitcoin. The fees are a bit high as you will be charged about 10% per transaction.
The interesting part about Bitcoin is that you can treat it like a stock, of which you can buy and hold as an investment in a way that you can now even do so in special retirement accounts. Whichever way you choose to buy and hold your Bitcoin, be aware of the risk of price swings.
Many invest in Bitcoin without basic knowledge or understanding. It is vital to do your research and understand the difference between short-term volatility and long-term investment fundamentals.
Research has shown that people that have done their research and had insight into enormous technological developments which take place in the Bitcoin space have been seen to be holding on to their Bitcoins. So be smart and open-minded about it and do seek help from certified financial advisors or planners if you require further assistance or clearance on what you will be signing up for before you start investing.