Bitcoin is a liquid cryptocurrency. The UAE residents can access cryptocurrency exchanges by opening an account and trading using bitcoins. Bitcoin is a cryptocurrency that is universally accepted. It is used for purchasing cryptocurrency virtually. The UAE does not recognise Bitcoin as a legal tender, however, there are means to trade bitcoin in the UAE. UAE Dirham is the only legal form of currency.
Bitcoin is not the only cryptocurrency but it is the oldest and largest circulating cryptocurrency. It is the most volatile currency. It carries heavy risk as any country can declare cryptocurrencies as illegal to trade. It is best to understand the basics of bitcoin and then take the decision on investing in bitcoin. Here are a few things to keep in mind while investing in Bitcoin.
- Choose a secure wallet
- Select the right trading platform
- Volatility
- Market knowledge
- Have a trade plan
- Placing the trade
1. Choose a secure wallet
To safely store your physical currency you put that money in a physical wallet. Similarly, to put bitcoin cryptocurrency safely you need a secured wallet. Not just bitcoin, it is important to secure any form of cryptocurrency in a secured wallet. In the UAE, the popular wallets are Ledger Nano S or the Trezor.
Cold storage hardware wallets are accepted as the best wallets to safeguard bitcoins. Most of the bitcoin exchanges provide in-built wallet services. These in-built wallets are centralised and have a possibility of theft. Choose a reliable wallet for your cryptocurrency, once you have that available the next step is to deal with the transaction. You have to choose a cryptocurrency exchange that will verify transactions with each broker. It makes buying possible with the wallet. In the UAE, buying bitcoin is easy. What is important to note is the broker from where you are buying and the exchange house that you select. Get a secured crypto wallet to purchase, store and receive gifts.
2. Select the right trading platform
There are many UAE based crypto exchanges which provide bitcoins. They also offer digital currency facilities. Factors such as less tax rate, environment regulation, stable government and various other reasons provide good reasons for many exchange houses and digital currencies to operate in UAE. There is support officially for cryptocurrencies and this makes bitcoins a very good investment option.
Local exchanges or international exchanges accept accounts from Emirates. Apart from the local and international exchanges, websites such as localbitcoins.com publish buyers and sellers across the UAE. It also provides a bid, offer price and feasible payment options. There are many trading platforms like Bitoasis, Palmex, Binance, Kraken and other trading platforms. Having a right trading platform is the initial step for having a successful trading account.
Related- Is Bitcoin legal in the UAE?
3. Managing Volatility
Cryptocurrencies are volatile in nature. The nature of risk is the volatility of bitcoins. Analysts for a long time have highlighted the volatility of the crypto market. You have to understand the risk and investment in bitcoins. At any moment the government can decide to declare bitcoins as illegal. Take a calculated risk and be attentive to the markets, do not invest money that you cannot afford.
Bitcoins are very expensive and change anytime. If you are investing more money into the crypto market then you are taking a higher risk. A sudden change in the market can have a direct impact on your investment.
The internal factors and the external factors of socioeconomic conditions can affect your investment. It is best to play safe with your investment and do not take high risks that you cannot afford.
4. Market Knowledge
Having a good knowledge of the market is very important. To acquire knowledge about the market you must read whitepapers. By reading the whitepapers of the company you will get the insights of the company. The process of functional analysis and key decision making of the company. A good written white paper will help you to know the company. You will get to know about the coin and the utility of bitcoin.
Related- Bitcoin in Dubai
5. Have a trade plan
Having a trade plan is very important when you are dealing with bitcoins. The success of any trader is about handling the volatility of the market. If you do not have a plan to trade it becomes difficult for handling the volatility of bitcoin. The trading plan should include methods of managing the risks, outlining the goals, methods of entering trades and exiting the trades.
Trading plan will help you to know where you are investing and how your money is being multiplied. You can plan for day trading bitcoin or swing trading scalping and automatic trade system
6. Placing the trade agreement
If you are willing to trade and want to make the transaction. Enter the amount that you want to trade in the deal ticket. Generally, the trading ticket is also called the deal ticket. It is a record of all the terms and conditions including the basic information of trade agreements. You can have trade agreements which would define the closing conditions.
When the market moves you can stop to close your position. You can set a certain amount or set a limit when it moves in your favor. Limits on bitcoin and stops are important for risk management. If you are expecting the bitcoin to increase then you can buy in the market. If you are expecting the bitcoin to fall then you can sell in the market.
Take away
Bitcoin is not the only cryptocurrency, it is the most popular and cryptocurrency. It is the costliest crypto currency in the market. There are other cryptocurrency options such as Ethereum, Litecoin and Ripple. You can look for any cryptocurrency that you can afford and plan for your investment. Have a good market knowledge and invest in bitcoin. Bitcoins are very volatile in nature. If you are able to handle the risk then you can invest in bitcoins.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
