Luno Africa general manager Marius Reitz has warned local buyers against chasing the price of Bitcoin, stating that local buyers should learn more about the digital currency instead.
Luno is a cryptocurrency exchange headquartered in London which operates across 40 countries and has over 2.7 million users across its global footprint.
The platform has become a favourite for South Africa cryptocurrency buyers due to its accessibility and the ability to trade both Bitcoin and Ethereum on its exchange.
Cryptocurrency seems to be heating up again, with more users opting to buy in as the price increases steadily. Bitcoin has risen by around 400% since the start of this year and is resting comfortably above $10,000 at the time of writing.
The graph below – courtesy of CoinMarketCap – details how the price of Bitcoin has changed from 1 January – 12 August 2019.
We spoke to Reitz about the price of Bitcoin and asked him about the biggest mistakes made by South African buyers.
Reitz said that the historical performance of Bitcoin is far from a guarantee that its price will continue going up, and users should not buy cryptocurrency irresponsibly.
“The price is not guaranteed to always go up, it can (and will) go down, too,” Reitz said. “This is why we encourage responsible investing: never invest in something you don’t understand, and never invest more than you can afford to lose.”
“We recommend starting as small as R20 and familiarising yourself with what you are actually buying via the Luno learning portal and keeping up to date on what’s happening via the media.”
Reitz added that while Luno does not take a position on the future price of Bitcoin, he expected Bitcoin as an asset class to continue increasing in value.
Bitcoin could also become less volatile once there is greater market acceptance and liquidity, he said.
Trading in Bitcoin and other cryptocurrencies can be a risky business, especially considering the potential for and the ramifications of user errors.
Reitz said that in addition to chasing the price of Bitcoin, South Africans are also prone to a number of other mistakes.
One of these is simply making errors when sending or receiving funds, as there is no third-party to appeal to if a transaction fails due to user error.
“Bitcoin transactions are not like bank transfers as they are not reversible. Check and double-check that you are sending Bitcoin to the correct person and address,” Reitz said.
“Also, ensure that you are sending Bitcoin to a Bitcoin account and not to a Bitcoin Cash account, as an example.”
Many South African cryptocurrency users also fall prey to phishing attacks which may impersonate exchanges like Luno to access the victim’s cryptocurrency.
“During times of price surges, new scams come to the fore and target consumers through SMS messages and emails pretending to be from banks or Luno,” Reitz said.
“Do not click on suspicious links received in SMS messages. Luno will never ask you to confirm your bank details, password, or any other private account settings via SMS, email, or phone call.”
There are other steps Luno customers should take to ensure their cryptocurrency and wallet are protected.
“Protect yourself from hackers. Luno suggests stronger password security, turn on two-factor authentication and lock your account if you suspect it is compromised,” Reitz said.
“Pay attention to your intuition — if something feels wrong, double-check it.”