The price of Bitcoin on Sunday 9 February rose past $10,000 for the first time since October 26, leading to frantic investment activities from existing and new investors.
As of the time of writing this article on Wednesday, Bitcoin was changing hands at $10,391 on the Coindesk Index.
For first time investors, the excitement or fear of not being left out may prove all-too powerful a temptation, hence they jump in without doing proper due diligence.
A country like Nigeria with an adult literacy rate of 62 percent where 95 percent of the citizens do not own a personal computer (PC), navigating a complex market with digital assets like Bitcoin, Ethereum, Bitcoin Cash, Ripple, and more than 2000 other altcoins that rely almost 100 percent on the internet to function represents a big challenge, so is finding a platform that can give you best foot in the door.
A cryptocurrency exchange refers to a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies.
At the dawn of blockchain, cryptocurrencies were traded through dedicated cryptocurrency exchanges or via the OTC market, where buyers and sellers arrange to purchase and sell coins directly between themselves.
Exchanges can come in four categories namely fiat-crypto exchanges; crypto-to-crypto exchanges; peer-to-peer exchanges; and brokers. While users are able to buy cryptocurrencies using their local currency (e.g. buying Bitcoin with naira) on fiat-to-crypto exchanges, they are only allowed to buy with another cryptocurrency on crypto-to-crypto exchanges. Peer-to-peer exchanges are those that simply match a buyer with a seller and will not take the other side of a trade. The most famous example is Localbitcoins, who will match a buyer with a number of sellers (if they’re available). But they come with a lot of security risks. Only recently LocalBitcoins had to delete several accounts of users in Africa as part of efforts to update its security protocol.
Brokerages are not exchanges in the strict sense because they do no allow users to own the underlying cryptocurrency. The advantage they provide is users are relieved of the responsibility of setting up a wallet. Brokerages offer a CFD or ‘contract for difference’ which allows you to speculate on the price of Bitcoin and other cryptocurrencies without being exposed to the same risks that exchanges offer.
It should be noted that it is possible for an exchange to combine some of the categories mentioned as the five exchanges on our list do. Beyond combining the different characteristics, they are super-simple platforms for beginners.
The Chinese exchange with headquarters on the Island of Malta is one of the biggest cryptocurrency exchanges in the world that provides a platform for users to trade in more than 100 cryptocurrencies. Beyond just possessing all the categories, Binance also owns a token, the BNB, that is among the top five best performing altcoins in the cryptocurrency market.
For a beginner, Binance might seem very overwhelming because of the deluge of information, charts and data. However, the exchange offers basic and advanced digital currency trading options to users.
Importantly, it is available in Nigeria. However, a security breach in May 2019 saw the company’s reputation as one of the world’s most well-secured platforms broken. The security on the platform has been upgraded now.
While it may not be in every country in Africa and offers Bitcoin, Ethereum and Bitcoin Cash for now, Luno is one of the most popular exchanges on the continent for beginners. Its presence in more than 40 countries, including Nigeria, puts it in command of about 3.5 million users.
Luno’s learning portal is arguably the richest educational platform on topics relevant to the cryptocurrency world. Also, the company continues to invest a lot of resources in educating both existing and would-be investors on the market. In 2019, it conducted several cryptocurrency literacy campaigns across Nigeria and every market where it has a presence in Africa.
The company is also one of the earliest exchanges to allow users in Nigeria to buy and sell Bitcoin and Ethereum in their local currency. Earlier this month, Luno introduced fully automated naira withdrawals which can be done at any time by its Nigerian customers. Beyond its offerings, Luno’s high cybersecurity and privacy priorities make it an ideal platform for beginners.
Founded by Nigerians, Buycoins maybe the latest entrant into the cryptocurrency market in Nigeria with users than its competitors, but what stands it out is its youthful approach to teaching beginners how to buy and sell cryptocurrencies.
The platform also has one of the lowest trade fees in Nigeria at 0.4 percent. Importantly, it has a stablecoin backed by the Nigerian naira, NGNT. The digital token is pegged 1:1 to the Naira.
NGNT transactions are on the blockchain, this means the transactions are public. If someone sends NGNT to another person, everyone can publicly view the status of the transaction, which means uncertainty is removed and confirmation can be known.
Quidax, another Nigerian cryptocurrency exchange registered in Malta, has made a big mark in a very short time. It is not only pushing the boundaries in the market, but it is also beginning to pay more attention to deepening users’ knowledge of the market. The CEO’s daily emails to users are one of the ways the company is employing to provide better insights into the market.
The Quidax platform’s unique sell proposition is the ability to settle to local banks instantly. Users can get their money within a few hours of withdrawal.
Quidax currently offers six cryptocurrencies including Bitcoin, Ethereum, Ripple’s XRP, Litecoin, Dash and USDT as well as wallet services which individuals and businesses can use to send, receive and store cryptocurrencies.
Remitano, a Seychelles-based peer-to-peer cryptocurrency exchange, offers trading of Bitcoin, Ethereum, Tether, and Bitcoin Cash.
Essentially, the Remitano app lets you connect with other cryptocurrency buyers and sellers to make trades using an intermediary escrow system for added security.
The platform holds buyers’ funds in escrow, then allows sellers to list their crypto assets for sale. When a seller completes the transfer of the altcoin or Bitcoin to the buyer’s wallet, Remitano places this in an escrow wallet, thus locking them. The buyer then transfers the agreed exchange amount in fiat currency to the seller’s account, and takes a transaction fee for the service provided, then remits the locked coins to the buyer.
