Are you planning to invest in Cryptocurrency? If you do, you are on track and in the right direction as long as it’s your passion. However, it would be best to learn how to trade in Cryptocurrency before investing your time, money, and energy into it.
Thus, this informative post will assist you in learning the ropes of trading crypto. Otherwise, you could burn your fingers.
What is Cryptocurrency?
It’s critical to define Cryptocurrency before even thinking of investing in it. Simply speaking, Cryptocurrency is an independent digital currency. It is virtual currency cryptography protects to avoid counterfeit or double-spending. It’s based on blockchain technology and exists outside government and central authorities’ control–it’s decentralised.
The History of Cryptocurrency
The origin of cryptocurrencies goes back to the 1980s. Then, David Chaum, an American cryptographer, invented a blinding algorithm that is still the main key of modern web-based encryption. Using this algorithm, parties can facilitate secure and unalterable information exchanges. Formerly, it was called “blinded money”.
Satoshi Nakamoto founded Bitcoin, the first modern Cryptocurrency in 2009. Many people started trading in and mining Bitcoin. By late 2010, numerous other similar cryptocurrencies emerged. WordPress was the first major merchandiser to receive Bitcoin payments in late 2012, followed by many other leading merchants.
Types of Cryptocurrencies
Bitcoin is the oldest and most popular Cryptocurrency based on blockchain technology. Other various types of cryptocurrencies with different functions and specifications also exist. By November 2019, over 18 million Bitcoins were circulating with a total market value of $146 billion.
Other cryptocurrencies are Litecoin, Peercoin, Namecoin, Ethereum, Cardano, and EOS. The total value of all the cryptocurrencies accounts for about $214 billion. However, Bitcoin holds the largest share at 68%.
Trading in Cryptocurrency
Cryptocurrency trading resembles Forex trading. You can purchase Cryptocurrency in US dollars. Cryptocurrency dealers can deal with a buy-and-hold strategy or trade the daily or weekly up-and-down volatility. However, betting on a downward move in price, called shorting, is unsuitable and too risky for beginners. Investing in Bitcoin or Altcoin can be a good option if you are looking for a simpler way to trade in cryptocurrencies.
Remember, the exchange is an important thing while buying cryptocurrencies. You need to research properly and decide on a reliable exchange. With the help of exchange, you will buy and sell Bitcoins or Altcoins directly.
Some of the factors you can consider while selecting an exchange are customer service channels, fees, reviews, coin offerings, and market rates. It would help if you found an exchange that meets your requirements. For instance, in Australia, crypto exchanges need to be registered under the Australian Transaction Reports and Analysis Centre (AUSTRAC).
Storage is another critical factor to consider while trading in Cryptocurrency. It would be best if you had a cryptocurrency wallet before trading in digital currencies. With the help of a cryptocurrency wallet, you can easily send and receive cryptocurrencies. Two wallet types exist, namely hot and cold wallet. Hot wallet comprises the internet-connected wallet, while cold wallets include offline wallets, USB based wallets, and paper wallets.
Benefits of Trading in Cryptocurrency
Using cryptocurrencies has numerous benefits. It is a fast process that also provides you with complete security. Some of its benefits are:
It is fast and borderless
Sending money from one place to another can be quite tricky and tiresome because of the various restrictions you face. These restrictions make the process time-consuming. However, digital currencies solve this problem. Bitcoin and other cryptocurrencies allow you to trade anytime and anywhere worldwide. You don’t even need a bank account to send and receive payments because a digital wallet is enough.
It is contactless
This can be an important factor, especially during the present times of the COVID-19 pandemic. You can have a contactless payment using Cryptocurrency.
It is accountable
Bitcoin allows you to establish a transparent payment system. All your bitcoin transactions get uploaded to a single file, and you can easily check any transaction. This can also help to eliminate double-spending.
It allows you to create interest.
With the help of Cryptocurrency and its trading, even an average person can gain interest and join in the process of learning the ropes of trading crypto. Many leading platforms provide this service.
Cryptocurrency has become one of the integral parts of the economy in this dynamic world. People can have faster, borderless, and contactless transactions using Cryptocurrency. This is quite helpful in the COVID-19 era. Cryptocurrency provides you with a more convenient transaction system. Most likely, the next generation might see an entire overhaul of the global financial system.