Johannesburg, 28 Feb 2022
For crypto newbies, getting started can be quite daunting. Merely navigating the deluge of acronyms, abbreviations and initialisms can prove overwhelming. But in reality – if you stick to the basics, read/research frequently and obey your risk tolerance – you will find it is a lot simpler than meets the eye.
First off – stop capitulating over the fact that you are "too late to the game". Jon Ovadia, CEO of leading South African crypto-currency exchange, OVEX, says the answer to that question is a resounding "no".
"Crypto-currency is very much in its infancy albeit considered mainstream. Why? Well because we are at the start of building an entirely new financial system."
The nascent asset class will likely face growing pains in the years to come. From government spats, misaligned incentives, regulatory scrutiny and network congestion. But each and every time these obstacles are cleared, as the crypto-sphere matures beyond the speculatory retail hype that drove the 2017-2018 Bitcoin bubble. This time round, things are different. Some of the world’s largest banks and fintech companies are changing tack.
Traditional financial institutions, which largely ignored or derided Bitcoin (BTC) in 2017, are now taking the asset more seriously. Goldman Sachs has already started offering clients in their wealth management division access to BTC. They are also actively trading Bitcoin futures with Galaxy Digital, the crypto merchant bank founded by Mike Novogratz. Morgan Stanley also offers its clients exposure to the legacy coin. Even Fidelity Investments has filed with the SEC to start their own actively managed crypto-currency ETF. A trove of fintechs like PayPal and Square have started accepting Bitcoin as a payment option. Other large blue chip companies like Tesla and MicroStrategy are holding BTC on their balance sheets.
The overall market, however, is now experiencing a ‘flight to safety’ moment as the Russia-Ukraine conflict rapidly deteriorates. Crypto-currency prices across the board have seen major corrections following closely behind legacy coin – Bitcoin – which is down 40% from its all-time high (reached in November last year). Despite falling back significantly from its latest ATH, many experts still expect Bitcoin’s price to rise above $100 000 at some point – describing it as a matter of when, not if.
Crypto-currency veterans such as Sam Bankman Fried, CEO of the largest crypto derivatives exchange in the world, FTX – postulate that there may be a silver lining in the face of this geopolitical crisis. For example, Bankman Fried believes that currency destabilisation in Eastern Europe means investors in those regions may look for alternatives – Bitcoin being an obvious choice. But how does one buy Bitcoin? With crypto exchange OVEX, you can buy/sell Bitcoin at the simple click of a button. This Bitcoin can then be put to work in OVEX’s Crypto Interest Accounts.
Hopefully by now you are, at least somewhat, up to scratch with where things are currently in crypto. And if a recovery is indeed imminent – you are going to want to get in now. But how? OVEX has put together a short guide, which breaks down the six key things to consider before investing in crypto-currency.
For people entirely new to crypto-currency and investing, the first thing they will come across when trying to buy or sell crypto is something called an ‘open order book’. This is a confusing technological ‘ledger’ of sorts and represents all open orders for a particular currency trading pair, such as Bitcoin/rands (or BTC/ZAR)
In simple terms, think of a bunch of people trying to sell their Bitcoin for ZAR. Each person asks for a certain price, and then buyers (bidders) will bid on the price they’re willing to pay. Eventually, a match is made – or not. This is what drives the market price up or down.
All of these bids and asks are usually displayed on a screen with tons of numbers – that’s the open order book. It can be really confusing for newcomers to investing. A person new to crypto just wants to buy some crypto-currency and know what they’re paying, like ordering in a store. More importantly, they want to buy knowing they are doing so at competitive prices.
The issue with instantly buying crypto-currency in this fashion is something called market taker fees. Most exchanges ‘penalise’ their users for taking liquidity off the exchange. This is when you instantly buy or sell a coin at (or rather close to) the prevailing market price, rather than putting in an order to be matched on the open order book. This fee makes buying or selling crypto-currency very expensive.
This is where OVEX stepped in. Instead of the traditional open order book method, OVEX developed a far more intuitive RFQ (request for quote) system, where someone can simply type in how much ZAR they want to spend and get an immediate quote for what that will give them in terms of Bitcoin or some other crypto-currency. What’s more – on OVEX you do not incur any trading fees. OVEX does not believe in penalising market takers and charges zero fees. You can start your crypto-currency journey at OVEX today by clicking here.
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