Despite a rocky 2022, interest in cryptocurrency has continued to surge, with many investors (traditional and novice alike) seeking out just how to buy cryptocurrency in the UAE.
This growing interest in cryptocurrency has happened despite the recent downturn in the prices of many crypto assets (especially between November 2021 and June 2022), as well as the high volatility that has been known to characterise them.
In the short term and going forward, many investors still believe in the ability of these digital assets to bounce back and re-enter a bullish run, resulting in potential gains for those who have entered the market during the recent decline.
More fundamentally, investors believe that cryptocurrencies are the future of global digital economies and they don’t want to miss out on future gains because of current losses.
Whatever the reason, cryptocurrencies are not going anywhere in the short term and many investors are still signalling they want in on the market by asking about what they are, how to buy them, and how to profit from them.
In this article, we will consider how to buy cryptocurrency in the UAE. We will cover:
- Beyond Bitcoin: Why you need to diversify into other cryptos
- Building a cryptocurrency portfolio
- How to buy cryptocurrency in the UAE
[Do you want to buy cryptocurrencies in the UAE and build your own crypto portfolio? Sign up for Sarwa Crypto, where you can buy and sell your favourite cryptocurrencies at zero commission.]
1. Beyond Bitcoin: Why you need to diversify into other cryptos
In a previous article, we considered how to buy bitcoin in the UAE. Everything in that article is still valid as bitcoin continues to maintain its place as the biggest cryptocurrency by market cap.
[For more on the reasons why many believe bitcoin is still a good investment, read “Is Bitcoin Still A Good Investment in 2022?”]
However, the cryptocurrency market is bigger than bitcoin, as bitcoin is just one out of many cryptocurrencies that are now on the market. But you should think of more than just accumulating countless other cryptos in addition to bitcoin; instead, expanding your investment into cryptos with different future applications can be advantageous in many ways.
According to the Modern Portfolio Theory, a Nobel Prize-winning economic theory, a diversified portfolio of negatively-correlated, zero-correlated, and/or less-positively correlated assets will reduce the overall risk of the investor. That is, investors can reduce the risk of their portfolio by diversifying into other assets that are negatively, zero, or less-positively correlated to the assets they currently hold.
While the correlation between bitcoin and other cryptocurrencies (altcoins) was very high between 2016 and 2018, that correlation has been declining in recent years, according to Crypto News.
In this situation, including other altcoins together with bitcoin will reduce the risk of an investor compared to investing in only bitcoin.
In 2021, different reasons were given for the declining correlation – the bull market, the opportunity to make massive profits in altcoins, speculation, among others. However, one reason we should not lose sight of, according to Lou Kerner, a Quantum Economics analyst, is that “some projects are scaling rapidly (e.g. Uniswap, Polkadot, Binance) creating significant value and bringing down bitcoin’s dominance.” Or, in the words of Joel Kruger, an analyst at LAMX, a global fintech company, “market participants are learning that many cryptocurrencies offer different value propositions. This is becoming more evident as we begin to see development in the space highlighting these differences.”
While we cannot deny the effects of a bullish market and investor speculation, it is also true that many other cryptocurrencies are showing their unique value based on their underlying technology, thereby generating interest from investors.
Consequently, by diversifying into these altcoins with unique technology and value propositions, investors can reduce their risk and enjoy the benefit of the reduction in correlation between bitcoin and other altcoins.
Secondly, diversifying into other altcoins is an opportunity for investors to earn higher returns.
Bitcoin is already a blue-chip crypto, which means it has reached the maturity stage of its life cycle. At this stage, price growth will be more modest which means modest returns on investment.
In contrast, most altcoins are in the introduction or growth stage of their life cycles with greater potential future opportunities for growth, especially if their technology proves to be as valuable as promised.
Consequently, there are more opportunities to earn outsized returns in cryptocurrencies by combining the growth potentials of altcoins and the stability of bitcoin.
2. Building a cryptocurrency portfolio
For the two reasons above, those who want to enter into the cryptocurrency market must think in terms of a portfolio of cryptocurrencies – rather than investing only in bitcoin, in one altcoin that has been hyped to 1000X investors’ money, or (equally as bad) by randomly selecting dozens of coins that you (or no one, for that matter) don’t understand.
Only by building a diversified portfolio of cryptocurrencies built for viable technological applications can you minimise your risk and maximise your returns.
So, in building a portfolio you must do your own research and focus on cryptocurrencies that have good technology, provide significant value, and possess long-term potential.
Or, in other words, jumping on the latest fad and joining the bandwagon is not an investment strategy.
The following are some of the most popular altcoins that you can consider.
[Note: This is not a recommendation of any particular crypto. Also, this is (admittedly) a small list and there are other popular altcoins out there that are not included yet. The point of this list is to showcase that there are many opportunities to create a diversified portfolio of cryptos.]
Today, bitcoin (BTC) remains the largest crypto in the cryptocurrency market, representing about 40% of the total global crypto market.
We have already detailed what is bitcoin in this article, and in this list we will instead focus on some other coins that investors should be aware of.
Ether (ETH)
Ethereum is a decentralised blockchain that is used for the building and running of different decentralised applications. It remains the most popular network used by developers.
ETH is the native cryptocurrency of the ethereum network that is mined to reward miners and it is the second-largest cryptocurrency by market cap.
Bitcoin Cash (BCH)
Bitcoin Cash is a hard fork created out of bitcoin. It was created out of bitcoin as a way to process transactions faster. The creators believed that if bitcoin was going to be a currency, a faster transaction speed was needed. They branched out with bitcoin cash when they could not convince other bitcoin developers and miners.
BCH is the native cryptocurrency of bitcoin cash and it is currently the 30th-largest cryptocurrency by market cap.
Solana (SOL)
Solana is a blockchain network that combines the proof-of-stake and proof-of-history systems as a way to reward miners. The network helps to power the creation of decentralised apps and has been crucial to the development of Defi, smart contract, and NFTs.
SOL is the native token of the solana network and it is currently the ninth-largest cryptocurrency by market cap.
Chainlink (LINK)
Chainlink is a decentralised oracle network that connects smart contracts on ethereum to APIs, payment platforms, and external data sources that are outside of the ethereum network. In essence, chainlink improves the functionality of the ethereum platform by enhancing smart contracts.
LINK is the native cryptocurrency of the network and it is currently the 24th-largest cryptocurrency by market cap.
Litecoin (LTC)
Litecoin is an open-source payment network. It has a faster transaction processing time compared to bitcoin, though it is behind it in global acceptance. The network also uses the same proof-of-work system as bitcoin.
LTC is the native cryptocurrency of the litecoin network and it is currently the 22nd-largest cryptocurrency by market cap.
Dogecoin (DOGE)
Dogecoin is a meme coin that has taken the cryptocurrency world by storm in recent years. Though many consider it as having no specific intrinsic value, it is very popular and has a thriving community of miners and investors all over the world.
DOGE is currently the 11th-largest cryptocurrency by market cap.
Algorand (ALGO)
Algorand is a blockchain infrastructure that seeks to power the integration of decentralised finance and traditional finance. While blockchain networks have been known to be able to choose only two out of three key objectives – decentralisation, scalability, and security – Algrorand has sought to achieve all three objectives through its unique infrastructure.
ALGO is the native cryptocurrency of the infrastructure and it is the 31st-largest cryptocurrency by market cap.
The Graph (GRT)
The Graph is a decentralised blockhain protocol that helps to index and query data from blockchain networks like Ethereum and Filecoin, similar to the way Google indexes and
queries data from across the web.
GRT is the Ethereum token that powers The Graph and it is currently the 56th-largest cryptocurrency by market cap.
[For a more detailed explanation of the technology behind some of the popular cryptocurrencies, read “What Cryptocurrency to Invest in Besides Bitcoin: An Objective View of 8 Coins and Their Tech”]
3. How to buy cryptocurrency in the UAE
Now that we have considered why you should create a diversified portfolio of cryptocurrencies and listed some examples of interesting cryptocurrencies outside of bitcoin, let’s now look at how to buy crypto in the UAE.
In considering how to buy bitcoin in the UAE, we focused on how to include bitcoin as part of your passive portfolio using Sarwa Invest.
Now, Sarwa has created a new product – Sarwa Crypto – with which you can buy bitcoin and other cryptos on your own, creating your own crypto portfolio.
[For more on the range of investment products offered by Sarwa and the investing principles that drive them, read “What is Sarwa: All Your Investment Needs in One Platform”]
Now let’s consider how to buy cryptocurrency in the UAE with Sarwa Crypto.
How to use Sarwa Crypto
Register on Sarwa
Sarwa Crypto is available on the Sarwa app. Once you sign up for the Sarwa app on the Google or Apple stores, you will have access to Sarwa Crypto under Sarwa Trade.
View the list of available cryptocurrencies
The cryptocurrencies currently available on Sarwa Crypto include Algorand, Bitcoin, Bitcoin Cash, Chainlink, Dogecoin, Etheremum, Litecoin, Solana, and The Graph. However, Sarwa is continuously working to add more cryptos to this list.
Available cryptocurrencies on Sarwa
Buy your favourite cryptos
You can buy a cryptocurrency by searching for it under the “Trade” tab on the Sarwa app.
Under this tab are various stocks, ETFs, and cryptos. When the cryptocurrency you searched for shows up, you can go on to buy.
Alternatively, you can create a watchlist that includes all the cryptocurrencies you are considering. Once you are ready to buy, you can go straight to your watchlist and create an order.
Creating a watchlist on Sarwa app
Whichever way, once you have clicked on the cryptocurrency, you will see its price chart, your current holdings (if any), and an option to buy or sell.
Like stocks, you can create a market order or a conditional order (stop order or limit order). With a market order, you will purchase the cryptocurrency at the current market price.
A limit order contains a maximum price above which you are not willing to go. Once the price is at or below that amount, the trade will be executed. A stop order contains a specific price and the trade will be executed only when the crypto trades at that specific price.
Similarly, you can buy your favourite cryptos by specifying the number of coins you want (e.g., 1 DOGE or 5 SOL) or by inputting a dollar amount (e.g., $50 worth of DOGE or $100 worth of ETH).
Benefits of buying cryptocurrency with Sarwa Crypto
Sarwa Crypto is not just another way to buy crypto; it provides many benefits that make it standout. Below are some of them:
- Zero commission: You can buy and sell your favourite cryptos at zero commission. This makes it easier for you to build your portfolio of cryptocurrencies.
- Zero local transfer fees: Similarly, you can transfer money from your UAE bank account to your Sarwa account at zero cost.
- Fractional trading: If you cannot buy a single coin, you can buy a fraction. For example, if you can’t afford one ETH, you can 0.05ETH.
- Low minimum account requirement: With $5, you can start your cryptocurrency investing journey.
- SSL security: When you are on the Sarwa trade, you can be confident that your data and money are safe. The app uses bank-level SSL security.
- Mobile-first experience: The app is designed to be mobile friendly. You don’t need to login to your account on a laptop before you can trade.
- Trading aids: The app provides you with daily news (“Sarwa market bites”) relating to the cryptocurrency market. While we believe in long-term investing, we want you to be aware of the current trends in the market. In addition, you can always find articles on the Sarwa blog that will aid your investment journey.
Are you ready to start building your cryptocurrency portfolio?
Register on Sarwa and start purchasing your favourite cryptos at zero commission with Sarwa Crypto. Do you have questions about the best way to proceed with your investment journey? Schedule a call with a Sarwa wealth advisor and we’ll answer all your questions.
Takeaways
- While bitcoin is the most popular cryptocurrency, there are thousands of other cryptos in the market and many of them are veyr valuable.
- Diversifying into other cryptocurrencies can help minimise risk and maximise returns.
- Before buying a cryptocurrency, do your research to ensure the cryptocurrency is valuable and has long-term potential.
- You can buy your favourite cryptos at zero commission on Sarwa Crypto.