Picture: ISTOCK
Picture: ISTOCK

You can't fault people for turning up their nose at bitcoin when it was worth $0.06 back in 2010. However, anyone who had forgone buying the cryptocurrency in December 2016, when it was around $800, was probably kicking themselves when bitcoin reached a high of almost $19,200 (about R229,000) in December last year.

The price has since retreated to $9,000, as concerns about the coin's safety rattle investors, but there are still people who are interested in getting in on the bitcoin wave, or exploring other cryptocurrencies.

For South African investors looking to buy bitcoin or any other cryptocurrency through traditional service providers that are regulated, this may be a while yet.

None of the registered financial services providers that are regulated by the Financial Services Board and Reserve Bank offer cryptocurrencies on their trading and investment platforms.

The Reserve Bank has said it is looking into regulating cryptocurrencies, but there is no timeline for this.

In the meantime, South African traders and investors can try legitimate platforms such as Luno or ICE3X. For a comparison of the two platforms, visit bitcoinzar.co.za. You can't buy bitcoin directly - you need a bitcoin wallet. You'll use the wallet to convert your currency - for example, rands or dollars - into the cryptocurrency of your choice before trading or investing. There are mobile, web-based, hardware and desktop downloads.

There is no magic formula for choosing the right coin. It's all about how much information is out there, how much your pocket allows and how much risk you're willing to take, especially if you go for a coin that isn't well known. Cryptocurrencies are no reason to throw out conventional investment wisdom. You should never put all your coins in one basket - so try to diversify across different coins.

According to Investopedia, the most popular currencies out there, ranked by market capitalisation, are bitcoin, ethereum, bitcoin cash, ripple and litecoin. Bitcoin cash is a spin-off of bitcoin, and was borne out of frustrated traders who felt bitcoin's transaction clearing times took too long.

Make use of sites such as coinmarketcap.com, bitcoin.com and Investopedia, which have reliable information on legitimate and not-so-legitimate cryptocurrencies. You should also visit forums to find out what traders and investors are saying about various cryptocurrencies.

Since there isn't a regulatory body that monitors cryptocurrencies, including bitcoin, it is easy for chancers to take advantage of unsuspecting investors.

About 25,000 investors worldwide, including some South Africans, were left wondering what happened to their money as Steven Twain, the founder of BTC Global, a cryptocurrency trading platform, has been untraceable since early this year. Twain has allegedly disappeared with around $50-million worth of cryptocurrency.

And he is not the only one.

Bitcoin.com reports that in the first two months of 2018, about $1.36-billion worth of cryptocurrencies was stolen from investors.

Of this amount 22% was due to investors being hacked and 13% due to phishing. Fraud and theft accounted for 30% and 17% respectively, while exit scams made up 17%.

Phishing is when fraudsters send clients a professional-looking e-mail asking them to send their personal details. In the case of a cryptocurrency scam, it may be the login details for the platform the investor uses. Exit scams take place when the platform continues to solicit funds from investors, but delivery of coins, or promised returns, are never realised.

No matter which platform you choose, do your homework. The risk of trading cryptocurrencies is heightened by the fact that investors do not have a regulatory body to turn to should they lose money to fraud.

Tsamela is the founder of Piggiebanker.com.