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Crypto 101 for beginners and professionals

Easy Crypto has 80% of the market in New Zealand and is now offering some compelling features for crypto beginners and professionals alike in SA.
Image: Bloomberg

Easy Crypto is a New Zealand-based crypto exchange (where it has 80% market share) that is making waves in SA.

Easy Crypto differs from other exchanges in SA in that it does not store your crypto. You have to open a wallet, which can be done in a few minutes by following the steps outlined in this video.

We spoke to Lloyd Brown, head of emerging markets at Easy Crypto, to find out what it can offer clients and how beginners can get started in cryptocurrencies.

What is a cryptocurrency?

Cryptocurrency can sound daunting not least because of the ‘crypto’ part. ‘Crypto’ means secret or hidden, so cryptography is a way of scrambling ordinary text so that it cannot be easily deciphered unless you have the ‘key’ which allows you to unscramble it. All cryptocurrencies are forms of digital money based on cryptography which make them virtually impossible to hack or steal.

Is Bitcoin a form of money?

Yes. The rand and the US dollar are more common forms of money, but these are what are called ‘fiat’ currencies that are issued by central banks and have legal backing from the countries in which they are issued. These are called legal tender laws. Bitcoin and other cryptocurrencies do not fall under any legal tender laws.

Why do we need Bitcoin if we have the rand?

The reputed founder of Bitcoin, Satoshi Nakamoto (we’re still not sure if he really is the founder), set out to create a new form of money immune from any form of interference and meddling by central banks. The problem he identified with ‘fiat’ currencies such as the rand is that they are subject to monetary inflation ­– in other words, central banks have become reckless in the way they expand the money supply, which ordinary people experience in the form of higher inflation. He developed Bitcoin to solve this problem.

It will never have more than 21 million ‘coins’ in issue (there are currently about 18.5 million in issue). He made it theoretically and practically unhackable by recording all transactions simultaneously on thousands of computers, which means a hack would have to get to each of these computers to steal coins – something that has been proven to be impossible.

Is Bitcoin a good investment?

Bitcoin has appreciated in value by more than 200% a year for a decade, making it one of the best investments of that period, if not in history. As stunning as this return is, it pales alongside other cryptos like Ethereum which has appreciated 1 000% over the last 12 months in rand terms, or Solana, which is up more than 1 600% over the same period.

That said, it is extremely volatile. This year alone it hit a peak of just short of R1 million in April and then fell to half this level. In 2018, it dropped by 84% before beginning its long recovery.

As a beginner, where should I make a start in cryptos?

Understanding that cryptos are volatile, you should not invest any money you are not prepared to lose.

But I would highly recommend people own some cryptocurrencies because of the potential to make outsized returns, such as those that I mentioned earlier. Most people start by owning a bit of Bitcoin. Diversification is important whether you are investing in the stock market or in cryptos, so you should also start spreading some of your crypto investments into coins like Ethereum (which goes by the code ETH) or Cardano (ADA) or Solana (SOL).

With Bitcoin now so close to R1 million, is it not too late to jump on board?

No. That was the same argument bandied about five years ago when Bitcoin was just a few hundred rand. If you listened to that argument then, you would have missed out on one of the greatest wealth-creating opportunities of modern times.

What’s a good strategy for investing in cryptos?

Invest a little bit weekly or monthly. This is known as dollar cost averaging. At Easy Crypto we have a tool to help you do this. If you invested R1 000 a month over the last four years, that investment would now be worth more than R237 000, a gain of 540% over four years – which is excellent by any measure.

The beauty of dollar cost averaging is that you are not paying attention to price or trying to time your purchases. You simply invest a regular amount weekly or monthly, regardless of price.

Unless you are a professional and have the time to study the markets, we do not recommend trying to trade cryptos for profit. A better strategy is to buy and hold for the long term.

At Easy Crypto, you require clients to open their own digital wallets. Other exchanges in SA provide those wallets for you. Why is this?

We take crypto security seriously, and this is one of the key reasons why we have captured 80% of the New Zealand crypto market. There is a saying in the crypto market: ‘Not your keys, not your crypto.’ What this means is that if you purchase crypto on an exchange and rely on that exchange to look after it for you, you had better be sure that it has the very best security available. Very few people are in a position to judge what level of security their exchange provides.

We suggest our clients open an Atomic wallet, which can be done in a few minutes. Your crypto is then stored on an Atomic wallet, which means when you want to buy or sell cryptos through Easy Crypto, we never have custody of your funds or your cryptos for more than about two minutes.

We in any event offer a 100% guarantee against any loss of funds while your cryptos or your funds are under our control.

To get access to your cryptos, a hacker would have to get hold of your private keys – which is the crypto equivalent of your bank account password. If that gets hacked, then you can lose your cryptos. Hence it is vitally important to pay attention to security and this will become even more of an issue in the years to come, as crypto prices rise to even higher levels.

If you have an exchange account, this means you have also surrendered control of your crypto to the exchange. This is known as a custodial wallet. It means you don’t fully control your funds and may lose them in case the wallet (or exchange account) is hacked.

To keep your funds safe, you must be the owner of your private keys.

Isn’t there a danger that my Atomic wallet can get hacked?

If you follow the set-up steps here and write down the seed phrase when your Atomic wallet is created, and do not store that on your computer, you are safe.

Any wallet connected to the internet is not as safe as a hardware wallet (which can and should be disconnected from the internet). At Easy Crypto, we recommend a cold storage wallet like Ledger Nano X and Trezor One; both are available and they are the industry standard.

How do I set up my Atomic wallet (or any other wallet of my choice, such as Metamask)?

  1. Go to https://atomicwallet.io/
  2. Hit the download button (you’ll be prompted for the device you are using).
  3. Once the download is complete, open Atomic wallet. You will be presented with the launch page – hit the ‘New Wallet’ button and you will be asked to choose a password.
  4. Very important: you will then be presented with a 12-word backup phrase which will be the key to recover any crypto assets stored in your wallet. Do not store these 12 words on your computer (which, if hacked, leaves the hackers with access to your Atomic wallet). Write these 12 words down and store the piece of paper in a safe place.
  5. Open an account with Easy Crypto at www.easycrypto.com. You are then ready to start buying and selling cryptos.
  6. Follow the instructions on this Youtube video which explains how to link your Atomic wallet to the Easy Crypto exchange. This also explains how you can fund your account by transferring funds from your bank account.

Okay, my Atomic wallet is open. What’s the next step?

Open an Easy Crypto Account. Go to www.easycrypto.com and you will be directed to the SA page; click the ‘Get Started’ button. Follow the steps on the screen, and your Easy Crypto account will be open within a few minutes. You are now ready to purchase cryptos.

How do I buy Bitcoin?

Once logged in to your Easy Crypto account, a box appears on the page prompting you to purchase Bitcoin (BTC) using rands as payment. As a beginner, you might want to stick with the more common cryptos, such as Bitcoin and Ethereum (ETH).

Where can I get more information?

Open an Easy Crypto account here. Follow the on-screen instructions and get started.

Follow the instructions in this video to open your Atomic wallet.

Easy Crypto recently finalised a $12 million funding round. What was this for?

This was the largest first funding round completed by any New Zealand firm, and will be used to fund Easy Crypto’s global expansion into new customer markets, such as SA, Philippines and Indonesia.

Brought to you by Easy Crypto.

Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.

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