Trading has been a popular way to earn money on the side and generate an established passive income, but nowadays more and more people are interested in trading cryptocurrencies to add to their portfolio.
With bitcoin achieving a market cap of over $200 billion, and other cryptocurrencies slowly creeping up behind it. Despite its mysterious nature, there are some pretty useful trading strategies.
Is Bitcoin A Currency?
Firstly, it is important to recognize that people aren’t treating bitcoin as a currency.
Although it has some of the characteristics of currency, you can spend bitcoin at a number of businesses that weren’t even aware what bitcoin was a few years ago. A lot of analysts are characterizing bitcoin as a commodity rather than a currency, and where commodities rely on supply and demand, bitcoin relies on its potential uses.
How Is Bitcoin Different Than A Currency?
Bitcoin differs from regular fiat currency, because it is not regulated by an official body such as a central bank or government.
It built on a piece of technology called blockchain, which acts as a distributed ledger and broadcasts transactions publicly to everyone on the blockchain network. Bitcoin is subject to extreme price movements and volatility can be through the roof and has the ability to wipe out accounts in a day, so it is a very risky asset to trade.
But, that doesn’t mean you can’t. We are going to look at some of the ways that you can obtain and trade bitcoin.
How Do People Buy Cryptocurrency?
Bitcoin exchanges allow users to exchange fiat currency into cryptocurrency like bitcoin, ethereum, ripple and dash etc.
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A user can create a wallet and deposit their cryptocurrencies until they feel it is the right time to buy or sell. Exchanges give users the ability to submit market or limit orders, which will be filled as your buy or sell order can be matched a corresponding one.
You’ll find that most exchanges offer the same services, however there are some that have more features that make the experience more enjoyable. Some services include the ability to receive live news updates that can help you work out which way an asset like bitcoin can go based on some facts that were reported in the news coverage. Often, you can connect to social media to post your live trading results, which can draw more people into the community.
How Do I Stay Safe Trading Cryptocurrencies?
Remember, if something seems too good to be true then it probably is.
Even Wall Street isn’t sure about how to act around cryptocurrencies, so don’t let some schmuck talk you into depositing thousands of dollars into a trading account because he claims he makes X amount of dollars a day trading bitcoin.
Let’s face it, if he can outsmart the guys at professional trading pits at Wall Street then why would he be telling you.
To tell you the truth, most people lose money when trading, whether that be on forex or stocks. Trading is hard, especially without a background in economics or a degree.
It is imperative that you conduct a substantial level of research before going ahead and committing yourself to the world of trading cryptocurrencies. Don’t be part of the 90/90/90 club, which states that 90% of traders lose 90% of their capital within 90% days.
Luke is Senior Editor at BitcoinCryptocurrency.
He is covering news on Blockchain and Bitcoin.
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He has also has written for Fast Company, Wired, the Guardian, Politico, and others. To get in touch with Luke for news reports you can email him on [email protected] or reach him out in social media linked below.