The digital coin has revolutionised the world of finance. Designed to be transferred digitally between counterparties, cryptocurrencies are well suited to investors who are keen on technology and the currency markets.
But what about the ‘lay person’? Many of us don’t know what cryptocurrency is and if there is a future in it.
Daniel Kibel, director of CM Trading, explains: “The definition of crypto is ‘something concealed’ and that is exactly what we are dealing with here, cryptocurrency is just that – it is virtual and as such it is very difficult for people to get their heads around. We are so used to going to the bank for our money and trading in shares that have a tangible asset behind them, but crypto has turned this all on its head.
“Cryptocurrency is not regulated as yet and everything is hidden and controlled by the users,” he says. “We are dealing with digital currency. As this is such a foreign concept to most people, we have initiated a specific cryptocurrency trading programme to provide the correct support and guidance to the trader to ensure that they are aware of the highs and lows of investing in this exchange.
“While digital currencies – such as bitcoin – are most certainly the future of trading and even eventually of banking, it is important that people understand the intricacies of the resource before you delve in,” Kibel adds.
“If we look at the very basic and probably one of the first virtual currencies – the electronic wallet – it has taken years for individuals to understand the advantages of using this method of payment. Families in South Africa no longer have to send cash to their loved ones over the border, they just use electronic money and even grandparents, with a phone, have access to funds – it is a whole new world and it is working.
‘’Investing in cryptocurrency is similar to any other investment and money can be made daily when trading correctly – once the potential investor is aware of that, the more return they will see,” he says.
“The concern with investing in any cryptocurrency is the unknown; which is why it is so important to have a partner that knows the market and has access to the latest prices and the latest trends. Most significantly, it is important that the investor themselves understands the market and what they are getting themselves in to.”
Depending on the cryptocurrency you choose – and the public is spoilt for choice, with bitcoin, dash, buzzcoin, gincoin, criptoreal, ETH and hundreds more – each has their own investment value.
Kibel explains that some offer initial investments as little as 10 cents (but then the returns are much lower), to thousands and then to hundreds of thousands.
“So one can see how important it is to understand the market, otherwise the losses can be just as big as the profit,” he adds.
“Cryptocurrency is the future of trading, it is the future of currency and traded responsibly and with the right guidance could result in a nice nest egg – but it’s important to do it responsibly.”
Did you know …
Bitcoin is illegal in seven countries including Iceland, Vietnam, Bolivia, Russia and China.
Cryptocurrency is not issued, endorsed or regulated by any central bank. It is created through a digital process known as mining.
Mining is the process by which transactions are verified and added to the public ledger known as the blockchain. Anyone with Internet access and the correct hardware can participate in mining.