Still New to Cryptocurrency? Here’s a Video Guide to Kickstart Your Investing Journey
Cryptocurrencies have become a buzzword globally and are steadily gaining traction in Kenya. These digital currencies, created using encryption algorithms, offer an alternative payment system that operates beyond traditional banking structures.
But what exactly are they, and how do they work?
Trading Cryptocurrencies in Kenya
In Kenya, trading cryptocurrencies involves buying and selling digital currencies on online platforms known as crypto exchanges.
These platforms allow users to trade Kenyan Shillings for cryptocurrencies like Bitcoin and Ethereum, utilizing local payment methods such as M-Pesa, bank transfers, or credit cards. Both international and local exchanges facilitate transactions, making access seamless for Kenyans.
Regulation Challenges
Despite growing popularity, cryptocurrencies in Kenya remain largely unregulated. Currently, the government imposes a 15% tax on crypto transactions.
In response to the increasing use of these digital currencies, a multi-agency technical working group, including the Central Bank of Kenya (CBK), was established to create a regulatory framework. Meanwhile, authorities continue to warn the public about the risks associated with unlicensed financial products and services.
One significant concern is the anonymity offered by cryptocurrencies, which can hinder law enforcement in tracking illicit financial activities. Additionally, some digital wallets are fraudulent, created to scam unsuspecting users.
How Kenyans Can Make Money With Cryptocurrencies
According to Mendu, Marketing Manager at Bitget Africa, there are several ways to profit from cryptocurrencies:
- Trading and Holding: Buying cryptocurrencies and holding them as their value appreciates.
- Airdrops: Platforms distribute free tokens in exchange for specific actions, which can later be traded for fiat currency.
- Staking: Similar to saving money in a bank, staking involves locking cryptocurrencies in a digital wallet to earn rewards.
Spotting Scams in the Crypto Space
The crypto market is rife with scams, such as Ponzi schemes promising guaranteed returns. Mendu advises users to be cautious of claims offering unrealistic profits. Instead, investors should:
- Use reputable crypto exchanges.
- Avoid schemes that promise “guaranteed income.”
- Research how cryptocurrencies are generated and stored.
Mining vs. Buying Cryptocurrencies
Mining, a process akin to extracting gold, involves solving complex algorithms to validate transactions and earn rewards in cryptocurrency.
However, the cost of mining equipment and electricity makes it an expensive venture. For most Kenyans, buying cryptocurrencies via exchanges is more feasible and accessible.
Crypto and Illicit Activities
The lack of regulation of cryptocurrency has raised concerns about its use in money laundering and other illicit activities. Distinguishing between legitimate traders and scammers is critical, especially for young people who might be lured into questionable schemes under the guise of forex or crypto trading.
Conclusion
Cryptocurrencies present opportunities and challenges. As Kenya navigates this digital frontier, public awareness, and proper regulatory frameworks are essential to ensure the safe and legitimate use of these emerging technologies.
