With bitcoin gaining popularity, value and legitimacy around the world, many believe it could change the game in Africa. Two thirds of the population remain ‘unbanked’ and many more are interested in trading speculatively in bitcoin. Regardless of why you have an interest in the cryptocurrency, first you’ll need to get your hands on some.
So how do you actually buy bitcoin?
This question has lots of answers and the most suitable method for you can change. I’m going to help you learn your options, and make sure you are ready to make the right decision.
Bitcoin in Africa
Every year interest in bitcoin is growing. What started as an experiment is now a viable currency and a great option for investors.
The bitcoin market is less established in Africa compared to countries such as the US or Europe. This means there are fewer options available and less information on how to keep your money safe.
The history of bitcoin is littered with scandals and security breaches. Exchange platforms have been hacked and companies have stolen users funds.
The bitcoin technology itself is secure, but the companies and third parties managing funds are subject to theft and fraud. This means you need to be very careful when choosing where to buy and store your bitcoins.
Your best bet is to choose companies with a good reputation, and solid security features. Once you have bought your bitcoins, be sure to transfer them to your own wallet.
There are many ways to buy bitcoins. The best method for you depends on a few questions.
- Where do you live?
- How much bitcoin do you need?
- How quickly do you want them?
- What payment methods are available to you?
- How important is anonymity?
The answers will help you decide the most suitable way to buy bitcoin.
Bitcoin exchanges are the easiest place to buy and sell. You can use many of them just like you would use a regular bank. You’ll pay fees for this service, but it is worth it if you are just starting out with bitcoin.
Many countries have a local bitcoin exchange that residents can use. If not, then there are a few great international companies that make it easy to buy bitcoins from almost anywhere.
International Exchanges – Credit Card / Paypal
The safest way to buy bitcoins is by using the larger international exchange platforms. Because the industry is so unregulated, it is possible for a company to just run away with your money. Reputation is the most important factor when choosing a company to buy bitcoins from.
Credit / Debit Card
Until recently, it was impossible to buy bitcoins with a credit card. People could buy bitcoins, then call the credit card company and ask for a chargeback. As it is difficult for sellers to prove the bitcoins were sent, they would be forced to refund even after the bitcoins were sent.
Luckily for us, a few exchange platforms have solved this problem.
CEX.IO is one of the largest and most trusted international bitcoin exchanges. You can buy, sell, and invest in bitcoin from across the globe, including GBP, which are rarely traded elsewhere. Also you can add your Credit Card in ZAR to your account. You’ll need to verify your identity to set up an account, then you can use not only bitcoin exchange, but also benefit from their affiliate program.
Paypal is an extremely convenient way of making online payments. Unfortunately, you cannot buy bitcoin directly with Paypal. It is too risky for the seller (because of the chargeback problem again) and it is actually banned by Paypal. Due to the high risks, bitcoin exchanges, working with the Paypal, have higher transaction fees.
There is a workaround, however. The Virwox (Virtual World Exchange) allows you to buy Second Life Lindens, which can be traded for bitcoins. Second Life Lindens (SLL) are the currency of the game ‘Second Life’. They have more info on their FAQ page.
Local Exchanges (bank transfer)
If you live in South Africa, Nigeria, or Kenya, you may be able to buy bitcoins directly through a bank transfer. This is a very popular method around the world, as it can be cheap and relatively safe.
There are two major players in this market.
- Luno (used to be BitX)
Luno can so far be used from South Africa, Nigeria and Kenya.
- Ice3X bitcoin exchange
Ice3X is a South African based company that also runs in Nigeria. For news on bitcoin in South Africa, check out https://www.bitcoinzar.co.za.
Peer-to-peer Trading (all payment methods)
The most universal method of buying bitcoins is peer-to-peer. This makes sense, as bitcoin is a peer-to-peer technology.
When buying bitcoins this way, it is essential to use an escrow service. This is a third party that will act as a mediator to ensure the transaction is successful. By far the most popular choice is a site called Localbitcoins.
Localbitcoins is an online marketplace where bitcoin buyers can meet bitcoin sellers. You can pay with almost any method, and there are no set prices or rules for making transactions. Just go to the site, sign up, find a seller and start buying.
Securing Your Funds
Once you’ve bought your bitcoins, you’ll want to make sure they are safe. The best way to do this is to store them in your own wallet.
Anonymity and Privacy
Many people choose to use bitcoin for privacy reasons. While it’s true that you can maintain anonymity when using bitcoin, the process of buying them can leave you exposed.
Using credit cards and bank transfers with inevitably leave a paper trail of your transactions. If you are worried about this you will want to try one of the more private methods, such as paying with cash.
Keep Up to Date
Just because a method of buying coins works well right now, it doesn’t mean it will last forever. Bitcoin exchanges can get hacked, or new laws can change the way sellers act.
This is especially true in Africa. With lots of new investment and new laws, the bitcoin environment changes quickly. To make sure you are safe and getting the best possible deal, you need to stay up-to-date.