When you decide to buy bitcoin, you will probably ask yourself: “Where do I purchase bitcoin in Africa?” The simple answer is an exchange. But, as you will learn from this guide, you cannot just buy bitcoin from any exchange.
Where to Purchase Bitcoin in Africa
You will have to consider several factors before choosing an exchange. For instance, you need to use an exchange that is available in your country and one that supports local payment methods. However, you also need to think about the type of platform to use.
Crypto exchanges come majorly in three forms: centralised, decentralised, and peer-to-peer (P2P). In this guide, we will discuss centralised and peer-to-peer exchanges.
Centralised exchanges act as intermediaries, just like banks. When you buy bitcoin from a centralised exchange, you are trusting that it will safely complete the transaction for you. Moreover, the exchange will store your digital assets on your behalf. As a result, trust is significant for centralised exchanges to succeed.
On the other hand, peer-to-peer exchanges give control to the people. Rather than buying bitcoin from the exchange, you will buy BTC from individuals that have listed their offers on the platform. Additionally, P2P exchanges do not have a third party. Instead, they use software to enable peers to trade with each other.
Purchasing Bitcoin on Centralised Exchanges
Both P2P and centralised exchanges have their demerits. However, events that have taken place in the past indicate that your assets are not as safe on a centralised exchange as you would hope.
For example, exchanges like Bitfinex and Mt.Gox got hacked, and people lost their money. That is why you will often hear experts say that you should never leave your funds on an exchange. The Bitfinex hackers moved 416 bitcoin on June 11, 2020, to an unknown address and probably sold it to unsuspecting buyers.
Moreover, some centralised exchanges could have limitations to the amount of money that you can withdraw, while others could make it completely impossible to withdraw funds.
As is the case with banks, centralised exchanges can collapse overnight, leaving behind frustrated and shocked customers. The disruption of trade, loss of funds, and lack of access to portfolios can make it difficult for users to move to another exchange and continue trading.
Another problem with centralised exchanges is that you have to deposit fiat money to buy bitcoin. Since you will have to enter your debit or credit card details, you will be giving up your privacy in the process.
Why Choose P2P Marketplaces?
P2P marketplaces are a popular choice for Africans. Also, P2P exchanges are more available on the continent than centralised exchanges. Therefore, you are more likely to find them easily accessible. For instance, P2P marketplaces – like Paxful and Localbitcoins – are available in many African countries.
Some P2P marketplaces have released more accessible versions of their platforms through mobile apps. For example, Paxful has an Android and iOS app that enables users to buy and sell cryptocurrencies straight from their mobile phones.
Unlike centralised exchanges, P2P marketplaces give you control over your funds, and you can transfer your digital assets to an external wallet at any time. Some P2P exchanges also offer non-custodial wallets that give users access to their private keys, giving them more control over their fund’s security.
P2P marketplaces make it easy for users to carry out fiat to crypto transactions and vice versa. That means that you can sell bitcoin and receive payment in your local currency. Paxful, for instance, offers flexibility to both buyers and sellers. Buyers can purchase bitcoin in their local currency, and sellers can sell bitcoin and cash-out in their local currency.
P2P marketplaces like Paxful support a wide range of payment methods, making trading convenient for users. For example, Paxful has over 300 payment methods, including mobile money, bank transfer, PayPal, and Western Union.
You will find that most centralised exchanges are rigid with the payment methods they support. Most times, they will only accept bank transfers. So, it is a breath of fresh air that some P2P marketplaces accept a variety of payment methods.
Another convenience that P2P exchanges offer is privacy. To buy bitcoin on Paxful, you do not have to deposit money to your account. Instead, you will send money directly to the seller’s preferred account of collecting payment.
Source of Income
- P2P exchanges enable users to make an income through trading and affiliate programs. Since users have the option to make sale offers above the market price, they could create a steady flow of income. You can start a crypto trading business by registering as a vendor on Paxful.
- You can also earn an income by joining the affiliate programs on P2P marketplaces. For example, you can earn a percentage of the escrow fees on Paxful once your affiliates purchase bitcoin on the platform.
- Lastly, if a P2P exchange shuts down, traders can move to another marketplace and continue trading. Therefore, the level of disruption to users here is lower.
From the above comparisons, it is clear that P2P marketplaces are the better platforms to purchase bitcoin in Africa. Nonetheless, caution is crucial despite the type of exchange you choose. Always remember to move your funds to an external wallet, preferably, a cold one. Also, implement the security measures that the platform you are using recommends.
Read this guide to learn how to buy your first bitcoin on Paxful.