Cryptocurrency is a type of digital currency gaining rapid popularity on the digital platform. These transactions are done entirely on the internet, thereby eliminating the need for physical currency. There is no direct involvement of central banking systems that use a centralized banking network. The entire digital transactions are secured through cryptography. The first known decentralised cryptocurrency is Bitcoin. Many alternatives forms of cryptos have since been created which are widely known as altcoins or alternative coins.
A public ledger has been put in place that maintains an ever-growing list of records from across the world. The transactions between two parties are constantly recorded on a distributed ledger. Exchange of currencies is cheaper and less time consuming through blockchain.
This is the most widely used cryptocurrency currently. Their currency is often referred to as bitcoins. Trading is done on their domain directly between two peers without the need for a third party. Bitcoins are granted as rewards to traders who involve in a process called mining.
It is a service done on the Bitcoin networks to keep records through computer power. The persons who actively get involved in this service are called miners. The main job of miners is to maintain the consistency of blockchains by re-grouping new dealings into a block.
In exchange for the services provided by miners, they are awarded bitcoins. There is a sub-class of mining known as cloud mining, where miners earn extra bitcoins without regular hassles of electricity consumption, bandwidth, etc. The entire job is done on the cloud.
Bitcoin Trading for Beginners
The simplest way to put things together for a novice to understand the trade is you purchase bitcoins at a certain price and sell them at a higher price. The difference in the prices after trading is your profit. There are primarily two types of traders in the Bitcoin business - the short-term traders and the long-term traders. The long-term traders hold their bitcoins for a longer duration and study the market trends.
The short-term traders take advantage of the intraday trading and perform transactions when there is a major swing in the marketplace. The Bitcoin market is very volatile, and the price swings witnessed during trading can either reward you well or put you at a big loss. So a great deal of caution needs to be maintained while trading with cryptocurrencies.
Bitcoins are traded globally, and no particular country has affiliation to this digital currency. Hence, the policies or economic situation of any major country has no direct impact on Bitcoin. Stock market trading is usually carried out during fixed timings and at official crypto exchanges across the world. Bitcoin has no official exchange, and the trading is carried out 24/7 across several different exchanges globally.
One other way to make profits on Bitcoin is to be an exchanger. There are certain exchange marketplaces like LocalBitcoins or Bitsquare, where you can offer services of trading coins by way of buying and selling. You place an offer to a customer to buy coins 1% or 2% below the market price, and later, they can be sold at a percentage higher than the prevailing market price.
This process of trading is called ‘spread.’ As a beginner, the easiest way to get into Bitcoin trading is by becoming an exchanger as you would not require significant insight into financial analysis. Trading on the other hand requires lot of skill and understanding, which can only be acquired over a period of time.
Strategies For Long-Term Trading
Certain prediction platforms like KoCurrency.com give a more precise understanding of price predictions on cryptos. Each prediction is carefully assessed and vast amount of information is released.
The trading techniques and patterns followed by expert traders are put forward to the benefit of new traders. Long-terms traders invest into trends that may take many months to even years to secure profits. Some experienced traders specifically look for long-terms trends and invest money in them as the risk of fluctuation is less here.
The speedy and more risky type of trading happens during day trading. Short-term price fluctuations are well tracked based on previous price movements, and buying and selling happens in a jiffy. Though the prospect of making bigger profits is higher in this kind of trading, the risk of losing big is also equally higher. Therefore, venturing into swing trading needs to be made with utmost caution.