Blockchain technology is a transformative invention of the modern world and has created a completely new opportunity for investors. Cryptocurrency trading was born in 2009 and has gained a copious amount of popularity since it was launched. Cryptocurrencies are now one of the most used methods of raising capital among investors all over the world; however, many others are still skeptical of being part of the digital currencies market.
What is Cryptocurrency Trading?
Cryptocurrency trading happens when you exchange the digital currency that you own into another kind of digital currency; and then exchange it back when the prices change, with the purpose of making profit. This process is similar to the Forex trading one; the main difference being that instead of selling or buying fiat currencies, such as the U.S. dollars or Euros, you buy and sell cryptocurrencies, like Bitcoin or Ether.
This market surged in 2009 when Bitcoin was launched by an anonymous person or group of people called Satoshi Nakamoto. The software, known as the blockchain, was left available and openly-published to all developers, giving them access to modify it. In other words, the cryptocurrency market isn’t supervised by a higher authority, but anyone who uses the software needs to follow a mutually-agreed set of rules.
How to Trade Cryptocurrencies?
There are a few ways you can obtain and trade cryptocurrencies. First of all, you might’ve heard of mining, which is slowly becoming the last choice of investors. You can ‘mine’ for Bitcoin through a program that can be downloaded and ran on your computer. Needless to say, with other faster and easier available options, mining isn’t the ideal choice anymore.
On the other hand, you can trade cryptocurrencies on three platforms:
- A trading platform – which is digital marketplaces where you can trade cryptocurrencies by buying or selling them, without interacting with other users.
- A peer-to-peer (P2P) – cryptocurrency exchange platform, which provides escrow and mediates the transaction services.
- A cryptocurrency broker – is an online platform that provides you with the possibility to trade cryptocurrencies by paying a commission imposed by them. They typically offer additional services, such as customer support, tools, and educational materials.
Ten years ago, mining was the best solution, nowadays – an online broker allows you to trade cryptocurrencies fast and it can also increase your chances of placing a successful trade. To put things into perspective, TradeFW.com is a leading cryptocurrency broker. This brokerage website is licensed and regulated; and it offers its clients one of the best trading platforms in the industry, the MetaTrader4, together with various modern tools; as well as an outstanding and formative educational center. Furthermore, TradeFW gives traders the opportunity to pick an account type based on their level of experience, and it also puts at their disposal a customer support team formed of experts in the domain. Cryptocurrency trading takes a lot of hard work – but a great broker surely simplifies everything!
Cryptocurrency Trading – Pros and Cons
This type of trading comes with its advantages and disadvantages. For some reason, investors have the tendency to focus more on the second category and the risks usually act as a barrier that stops them from trading virtual currencies. However, the situation isn’t that bad! Here’s the best and the worst you can expect:
Pros of Cryptocurrency Trading
- This market is extremely flexible; you can trade 24/7.
- The market can be very volatile and offer big profits.
- Cryptocurrencies aren’t inflationary, meaning that in case of high inflation, virtual coins won’t be as affected as fiat currencies. We can even say that inflation is almost non-existent when it comes to cryptos.
- The transactions are made extremely fast and take up to just a few seconds.
- Transactions have low costs.
- It is transparent.
Cons of Cryptocurrency Trading
- There is no universal system that supervises the activities.
- The market’s volatility can also be extremely risky.
- It is not anonymous.
- Cryptocurrencies aren’t legal all around the world.
- Hacks are possible anytime. However, blockchains are always updated to address possible attacks.
There’s no light without darkness, right? As any type of trading, cryptos carry some risks that sometimes you won’t be able to control. However, they can surely be diminished when you are prepared. Try to inform yourself, use the educational materials your broker puts at your disposal; communicate with other crypto-traders and try to get as familiar as you can with this world. When you’re finally ready to trade, come up with a trading plan and make your moves based on what you’ve assimilated. Always have a plan and a goal!
Cryptocurrency trading can be an exciting experience and a very profitable one. It still has a long way to go until it gains the trust of more investors, but so far, the successful stories and many great opportunities of this revolutionizing invention are overwhelming.