Updated: Mar 29, 2021
Always remember you can always buy a fraction of bitcoin. As low as Kshs 500 💡
This is a new asset class that has been taking shape in the last decade. However, it is highly unregulated compared to let's say the equities and bonds market. Governments have been reluctant to take a stance on cryptocurrency regulation. The Kenyan government warned Kenyans a number of times to be careful about investing in cryptocurrency.
Cryptocurrency is defined simply as a digital currency free from central bank regulation, very hard to counterfeit due to the security features and is free from government manipulation.
Just like other currencies, its value fluctuates. Let's say the value of Kshs to USD changes quite often. The same way the value of the digital currency fluctuates - only that it is more prone to fluctuation compared to traditional currency due to the lack of a regulatory body.
A classic example is that the value of 1 bitcoin in December 2017 was Kshs 2M and Kshs 300,00 in January 2019.
Why invest in cryptocurrency?
Since it's cool and all my friends have been talking about it!😅
First, it is good to understand the enormous risk that comes with cryptocurrency investment. You stand to gain 📈 50+%, but at the same time, you stand to lose more than 📉 50%. Remember high-risk, high return and also a higher probable loss.
Note ☝: Cryptocurrency is a speculative asset and you should limit your exposure to 10% of your total assets to ensure you are not overexposed to such a volatile asset.
Reasons for investing in cryptocurrency:
Cryptocurrency regulations are starting to take shape and the prices have stabilized over the past 1 year.
Blockchain, the underlying technology in Bitcoin and most of the cryptocurrency is useful. Global financial firms are adopting block-chain technology.
It gives Kenyans exposure to a global asset with less paperwork compared to global equities.
It is a new asset class that is taking shape and most investors have a portion of their wealth in cryptocurrency. This ensures diversification of your portfolio (article on diversification coming out soon).
A world full of variety
In the last few years, the number of cryptocurrencies has erupted from a few hundred to thousands. Due to lack of regulation, some cryptocurrencies are pyramid schemes and others are scams. As a result, investors have lost lots of money.
Stick with the most popular ones. Let's say the top 10 cryptocurrencies; you can see the list here. Bitcoin has topped the list as far as I can remember.
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Interested in buying Bitcoin? Check out How to Buy Bitcoin worth Kes 1,000 in Kenya
Disclaimer: The views expressed in this publication are those of the writers where particulars are not warranted. This publication is meant for general information only and is not a warranty, representation, advice or solicitation of any nature. Readers are advised in all circumstances to seek the advice of a registered investment advisor. Full Disclaimer