By Andrew Gum
Cryptocurrency is a type of digital money that only exists online. It is protected by special codes (cryptography) and runs on a system called blockchain, a public digital record that cannot be changed. Unlike Uganda Shillings or US Dollars, it is not controlled by any bank or government. The most popular cryptocurrencies are Bitcoin and Ethereum.
How does one make money in Crypto
People can earn money by trading cryptocurrencies. This involves purchasing coins like Bitcoin or Ethereum on platforms such as Binance or Coinbase when prices are low, then selling them when the value increases. “I usually wait for the prices to drop, although it’s not always easy to catch the lowest point. That’s why I constantly keep an eye on the market,” an anonymous student explains.
Long-term investing, or “HODLing,” means purchasing coins and holding them for months or years until their value increases significantly, then selling them. A third year student studying Bachelor of Science in Accounting and Finance shared that he buys coins and holds them for about a month and sells them when the value has increased.
Another method of earning from cryptocurrency is staking, where users lock their coins in a wallet to receive yearly rewards in the form of extra coins, which can later be sold for cash. “It’s tough to buy a coin and keep it locked up for over five months. It ties up my money, so I rarely choose to stake,”he admits.
Lastly, mining is another way to make money with cryptocurrency. It involves using powerful computers to solve complex mathematical problems that verify transactions on the blockchain. In return, successful miners earn new coins like Bitcoin, providing a source of income.
Profits are typically realised by selling crypto, then transferring to bank accounts, or using crypto directly where accepted. Success hinges on market knowledge, risk management, and avoiding impulsive decisions in this highly volatile space.
Crypto allows people to send and receive money quickly and with low costs across the world. Many people like it because it feels modern, private, and full of opportunity. Since Bitcoin was created in 2009, thousands of other coins have been introduced.
When Bitcoin’s price rose to over $60,000 (about Shs 219 million) in March 2021, many investors made huge profits. Public figures like Elon Musk and athletes joined the trend, drawing more attention.
In Uganda, university students, including at Uganda Christian University, have started trading in crypto. Many believe it offers an easy way to make money, especially if one can monitor market trends closely.
When does it become risky?
Cryptocurrency prices can change very fast, even in minutes. A third-year Business Administration student who requested to speak anonymously said, “I’d refresh my phone every ten minutes at night. The market is unpredictable, and you must always watch it.” Patrick Moore, a crypto expert at CryptoWhat, an organization that provides a platform for discussions about cryptocurrency and market analysis, warns that high price changes make crypto risky. Students often use their pocket money to invest, which can be hard to recover if lost.
A final-year Procurement and Logistics student who asked to be kept anonymous, says he has been trading since his first year and uses his earnings to pay for his hostel. ‘’I made some good money but it’s very risky. You can lose it all in a second because the prices keep on changing every minute. I spend sleepless nights watching charts in DH. One wrong move and you’re back to zero which is a bit challenging and sometimes I regret joining but I can’t leave,” he shared.
The crypto world is full of scams, fake coins, pyramid schemes, and hacking risks. New users, like students, are often easy targets. Some use Online Wallets which is a digital tool that allows users to store, send, and receive crypto coins like Bitcoin or Ethereum over the internet or Crypto bank accounts, but these can easily get hacked.
Once coins are sent to the wrong address or stolen, they can’t be recovered. There is no customer support or refund option. Changpeng Zhao, founder of Binance, a platform where users can buy, sell, trade, and store digital currencies like Bitcoin, has warned about fake platforms which often expose people to online scam.
One third-year student of Business Administration shared how he got scammed through a fake crypto investment group on WhatsApp. “I joined a group that promised 50% returns in three days,” he said. “It looked real. At first people were posting screenshots of their ‘profits.’ I sent UGX 200,000, and they told me to wait. After two days, the group was deleted, and the contacts were unreachable.”
Another student in their second year, pursuing Bachelors of Science in Information Technology also fell into a phishing scam while using an online wallet. The student says he received an email purportedly from Binance which needed him to verify information for his account by entering his details. Shortly after the account was hacked. He lost all the money in the account, Shs450,000 worth of Bitcoin, and the account disappeared.
Cryptocurrencies operate outside traditional governments or financial institutions’ control, leaving students without protections like those offered by banks. If scammed or hacked, there’s no support provided. As Scott Sadler, CEO of Keystone Blockchain Investments stated, the absence of regulation means users bear full responsibility for security.
Some cryptocurrencies have low liquidity, meaning few buyers or sellers, making it hard to sell coins quickly or at a fair price. Students needing urgent cash may be forced to sell at a loss, worsening their financial strain.
One therefore needs to be careful about dealing with such currency knowing full well the immense risks that come with it.
