In the current times, whether you are on YouTube, Facebook, Twitter, or any other social media platform, you must have come across advertisement for ‘Cryptocurrency Trading’. That might be one of the reasons why you are here in the first place.
There is a huge amount of people that have started shifting to the online trading platform especially because of the cryptocurrency, which is one of the instruments under online trading. Now without wasting a single-second of your time, let me walk you through around cryptocurrencies and their trades.
Why Cryptocurrency Trading was needed?
When Bitcoin (BTC) was introduced as a cryptocurrency, the only way of acquiring it, was through mining. With the passage of time, cryptocurrency exchanges came into being and provided people the opportunity to perform sale, purchase, and exchange of cryptocurrencies.
As cryptocurrency was acquirable through mining in the beginning, the platform was manageable by people who were tech-savvy and had experience in computing/programming.
The cryptocurrency trading platform was introduced so the industry to make it to masses and most importantly, to the investors who were interesting in spending their money on cryptocurrencies.
Before a person starts investing in online crypto trading, he/she must know what kind of options they will have to choose from. In the beginning, the users had access to only one type of crypto-trading but with time, the cryptocurrency exchanges have become innovative in providing users the ability to perform crypto-trading in more than one way.
Traditional Cryptocurrency Trading
When it comes to traditional cryptocurrency trading, it is somewhat similar to Stocks trading. Here, instead of purchasing the assets of a company, you purchase the tokens or some part of the tokens of the cryptocurrencies.
You will be surprised to know that at present, there are more than two thousand cryptocurrencies out there in the crypto-trading markets to choose from. Some of the major cryptocurrencies currently being traded are Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP) etc. that the investor can choose to trade with.
Before trading can be started, the first thing that needs to be done is to top-up the wallet provided by the crypto-exchange the persons signs up with. Then, the user can choose the crypto-asset he/she needs to trade in. Once selected, the user needs to visit the crypto-markets, observe the trends, price fluctuation, historical reports, demand/supply of crypto-asset, then make a decision based on the data collected.
The process is as simple is stocks trading where you buy an asset when its price is low and sell it when its price is high, and the difference is your profit.
Cryptocurrency Trading via Contracts-For-Difference (CFD)
When trading in cryptocurrencies through the traditional method, an investor needs to have a decent amount of money to have direct holding of the cryptocurrencies. However, most of the times, more than half the investors do not have the resources to buy cryptocurrencies. Therefore, their crypto-trading journey ends before it even begins.
In order to tackle this problem, the option of CFT trading was introduced where the person has the ability to crypto-trade without having to buy actual crypto-assets.
When performing Crypto-Trading via CFD, the users do not have to buy actual crypto-tokens. Instead, they only have to choose the cryptocurrency and pre-decide whether the particular cryptocurrency’s price would go up or down at a pre-decided date/time. If the deal goes in the favor of the investor, then the investor make a profit. If it does not, then the profit goes to the broker.
Top Cryptocurrency Trading Firms
When a person considers doing online trading, the first thing that comes to mind is whether it will be the right decision or not. It is true that the very (decentralized) nature of the crypto-industry makes it a risk-asset. However, there are several crypto-trading exchanges that have been serving users for years without causing any issues or distress.
Some of the big names in the cryptocurrency trading industry are Crypto Engine, Binance, Bisq, Coinbase Pro, and Coinbase.
Why Trade in Cryptocurrencies?
It is completely okay to think why one trade in cryptocurrencies when there are other reliable trading instruments in the online trading markets such as FX, Commodity, Stocks, and Indices trading. The main reason is that in the past couple of years, cryptocurrency industry has gained more success, user-base, investments, and mainstream recognition than any other online trading instrument.
As per the statistics from back 2018, there were only 35 million unique users in cryptocurrency trading. As per the stats from 2020, the number has gone all the way up to 100+ million unique users.
Even the major financial institutions have now started investing in cryptocurrencies and most prominently, in Bitcoin (BTC). It was just two months ago when Bitcoin (BTC) was sitting at $10,000 per BTC, which as of now has increased to $19,204. Therefore, if you are thinking about investing, then it is the best time to invest in cryptocurrencies.