This episode focuses on how to purchase crypto if you are banked, i.e., if you have a bank account and a credit/debit card. Lorraine explains what a centralized exchange is, how to select an exchange that meets your needs, and how to fund your exchange account. She also highlights some exchanges that are worth considering.
Episode Highlights
Centralized exchanges facilitate the buying and selling of crypto
Signing up for an account on an exchange is fairly straightforward
Always do your due diligence before you sign up for an account; in particular, read the terms of service.
Funding a crypto account can sometimes be convoluted.
There are various exchanges that Ugandans can use.
Helpful links
Exchanges
Exchange hacks
Mt Gox hack 2014: https://www.investopedia.com/terms/m/mt-gox.asp
Binance hack 2019: https://www.coindesk.com/markets/2019/05/07/hackers-steal-407-million-in-bitcoin-from-crypto-exchange-binance/
Terms of service
Coinbase terms of service: https://africa.businessinsider.com/tech-insider/coinbase-warns-users-could-lose-their-crypto-holdings-if-the-company-goes-bankrupt/r6bs75w
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/89c60d81-41a2-4a3c-86fb-b4067ab1016c.pdf
Hi, welcome to decentralized a podcast on the crypto space, where I'll be talking about the crypto landscape, the crypto infrastructure, crypto assets, and the crypto market, as well as factors that affect it. My name is Lorraine Mutyaba and I am the host of decentralized.
As I was having lunch with a friend of mine, an old friend of hers decided to join us. When the conversation shifted to crypto, as it sometimes does. Angela turned to me and said, Lorraine, I've been trying to buy crypto. I'm trying to find someone who can do this for me, because it's probably next to impossible. And I just don't have the time. But I would really love to dip my toes into this new space. So the focus of today's episodes, my next few episodes will be how to buy crypto, how to store it, how to protect yourself and your funds online.
There are many ways to buy cryptocurrencies. You can use peer-to-peer marketplaces, an exchange, a brokerage firm. And some remittance companies are offering, uh, crypto buying and selling on their platforms as well. I'll start with the exchanges because these receive the most volume, that is, they have the most transactions involving buying or selling of crypto. And I'm going to focus on the centralized exchanges, which are companies or firms that operate these platforms, where people can buy and sell crypto. , There are decentralized exchanges as well. But to use these, you require a certain level of knowledge about crypto. You have to be comfortable with, um, crypto wallets.
You need to know how to secure your funds online. So I'll, I'll touch on that a bit later. You may be wondering what's an exchange. So it is a platform that links buyers and sellers and charges a small fee per transaction. It also holds your crypto for you. That means it offers a custodial service. The fees that it charges can range from the very reasonable to daylight robbery and the exchanges themselves can range from the very reputable to the very sketchy.
Most exchanges offer more than just the facilitation of transactions, even though that is their core business, an exchange like Binance, which based on the latest data is the leading exchange in the world by volume offers, um, saving products, trading, leverage trading, and a few other services. As I mentioned, a few episodes. back, margin trading and buying with leverage are dangerous, even when you know what you're doing. So just steer clear of them until you have finer tools, a firmer grasp of market trends and human psychology.
Unfortunately, no exchange has a 100% score. Um, but there are several that are better than others in various ways. And it's important that. you review various, um, exchanges, and then find one that meets your needs or that you're comfortable using. Remember to read those terms of service as well. Why is it important to read the terms of service of the exchange? Well, you would want to know what would happen to the crypto being held by the exchange in the event that the exchange files for bankruptcy. You also want to know what the exchange is doing with your funds? Well, the first thing you need to look at is the fees charged. Are they reasonable? Are they exorbitant. Reputation?
Is this a reputable exchange? Is this a sketchy, sketchy exchange? Everyone at some point in time has used a sketchy exchange for one reason or another. I know I did several years ago and it was the worst thing ever. So you're looking at fees, you're looking at reputation. You have to look at jurisdiction, not all exchanges, onboard users from every part of the world. You have exchanges that only work in Hong Kong in Japan, and then you have others. that onboard users from different parts of the world from various parts of the world. And these are the ones that I would recommend you, you look at, you also have to consider security. If you choose to leave your coins on the exchange, if you, um, allow them to hold those coins on your behalf, then you have to ask yourself what security measures do they have in place?
How secure are my coins and how secure is this platform? we haven't had a big hack since about 2014 when almost 750,000 Bitcoins were siphoned out of a wallet owned by one of the largest exchanges. at that time Mt. Gox, we had an, uh, hack in 2019 when Binance was hacked and about 40 million. Dollars worth of crypto was siphoned out of one of their wallets, but we haven't had a major exchange hack since then. If you would like to sign up for an account on an exchange, I would suggest that you consider the following exchanges, Coinbase, which serves 13 African countries, Gemini, which serves three African countries. And then, um, Binance, which serves a greater number, FTX as well as Kucoin. You could also consider Bitstamp, which serves many countries well. Again, remember to do your, your due diligence before you sign up and read the terms of service.
Once you decide on an exchange, the next step is signing up. And this is something that's very straightforward. You simply sign up for an account. You will be asked to complete a KYC process, know your customer process. This can vary from the very basic on some exchanges to the very involved and intrusive on others, where you are asked to provide a considerable amount of supporting documentation. But once your account is approved, once you meet the requirements set by the exchange, then you are good to go. You are ready to fund that account and to buy and sell cryptocurrencies. How do you fund the account? So some exchanges. Accept, um, allow users to fund their accounts via wire transfer from your local bank.
Others allow you to use your credit or debit card, if you have one. Usually when you buy cryptocurrencies using your debit card, you buy them at a premium and there's some extra charges that are involved. So just make sure you know, what you will be charged by your bank and also by a third party who might be facilitating the transaction because those fees can quickly add up.
So what if the exchange that you are using does not, uh, support the transfer of funds from your Uganda account and does not support cards that are associated with accounts found in Uganda, but you really want to buy a cryptocurrency on that exchange. This is where Bitstamp and Kraken would prove quite useful. You would have to sign up for an account on an exchange that permits users of those of that exchange who are based in Uganda to fund their accounts via wire transfer or their debit or credit cards. So I'll repeat that just for emphasis. You would need to sign up. On an exchange whose users that are based in Uganda can fund their accounts via wire transfer or their debit and credit cards.
How would this work? Well, you would sign up for an account on either Bitstamp or Kraken you would fund that account via wire transfer from your bank account in Uganda or your debit card or credit card. Then once those funds are credited to your account, you would buy cryptocurrency. Then you would transfer that cryptocurrency and then buy the crypto asset you had wanted to buy initially.
So it is a convoluted process, but it is a solution to a problem that many people will have. I've explained how to sign up, um, how to fund your account and the different kinds of exchanges that are available to you in Uganda, as well as what you need to look out for. If you intend to use any of them , but what happens if you don't have a debit card, if you don't have a bank account?
So this is where the peer -to- peer marketplaces come in. And, um, it's an option. If you do not want to use your debit card, you don't want to use your bank account or you do not have a bank account. You can always use a peer-to-peer marketplace. That's what I'll be talking about in the next. This is all I have for you today.
Thank you for listening in until next time. Take care of yourselves.