Crypto Trading | What is Cryptocurrency Trading?

27 Jan
2020

Crypto trading is the act of hypothesizing on cryptocurrency price movements through a CFD trading account, or of buying and selling the underlying coins through an exchange.

Cryptocurrency refers to digital or virtual money exchanged in the form of tokens or ‘ coins. ‘ Crypto is a decentralized currency that uses encryption to optimize security and allows traders to function securely without government interference.

Cryptocurrencies are an emerging market that has become increasingly popular as large cryptocurrencies such as Bitcoin and Ethereum have reached the mainstream.

Many cryptocurrencies, also referred to as simply “cryptos” which’ are operated by Blockchain technology. These vary from proven fiat currencies in that they are decentralized assets that are currently unregulated or governed by any single country, central bank or regulatory authority.

 

                                 What are some of the biggest cryptocurrencies?

 

Here are some leading cryptocurrencies, all of which are relatively new assets, so knowing how each crypto fits into the wider market is important before you start developing your own trading strategy.

 

Bitcoin – BTC

Bitcoin is the first decentralized cryptocurrency or peer-to-peer digital payment network designed to challenge traditional financial structures using Blockchain technology for transactions with other currencies, resources or items.

 

Bitcoin Cash – BCH

Bitcoin Cash comes as a response to the well-known speed problems Bitcoin was suffering from and offered a better alternative than others. Currently, it is the only technology that provides a scaling solution.

One function that the original Bitcoin doesn’t have is the EDA algorithm, which makes the network more reliable during high price times. A modern algorithm that guarantees regular chain activity in the event of dramatic changes in the number of miners provides additional stability to the currency as a whole.

Bitcoin Cash uses a different hash algorithm than the one Bitcoin uses. So, it is no longer possible to replay between the two chains. It has a distinct transaction signature to prove that it is different from Bitcoin.

Ethereum – ETH

Ethereum (ETH) is the second most valuable virtual currency on the market right behind bitcoin (BTC). Ethereum is a decentralized, open-source and distributed computing platform that allows for the development of smart contracts and decentralized applications, also known as Dapps.

ETH is the token that is used on the Ethereum network. Currently, its trading at $219.52, with a market cap of $23,528,436,159. 

Ripple – XRP

XRP is a token used to signify the transfer of value across the Ripple Network. The main purpose of XRP is to act as a mediator for other exchanges, including cryptocurrencies and fiat.

The Native Crypto Asset Protocol XRP drives any transaction operation on the Ripple Network or RippleNet. The shared public database/leader called the XRP ledger tracks all XRP transactions.

Bitcoin transaction confirmations can take most minutes at high transaction costs, whereas XRP transactions are verified in seconds at a low cost. XRP is a technology mainly known for its digital payment network and protocol. Most major banks are using the XRP payment system.

Litecoin – LTC

Litecoin is one of the unconditional members of cryptocurrencies. The main reason for LTC coin success is the essence of its technology that allows transactions to be made faster and cheaper across the network. Designed to support cross-border payments with transaction times faster than competitors.

This introduction by LTC should provide for stronger secrecy of transactions made with this currency. The developers also argue that this should not impact the security of the Litecoin Lightning Network.

 

                                        Benefits of Cryptocurrency Trading

 

Fast Trading Transactions

Trading platforms for cryptocurrencies are also designed to make transactions quicker and more convenient. No matter how or what you trade, speed is crucial to ensuring that you have the best trading price. 

It also means that you will never miss a chance to make a significant amount of profit. When you use a trading platform, you can exchange cryptocurrencies as quickly as possible.

Speed

Because of the creativity, most cryptocurrency trading platforms these days are designed to teach new traders the fundamentals of trading. In addition, you need to be comfortable with issues like reading charts and researching market movements before you start trading.

Cryptocurrency trading involves a lot of risks, and you may even suffer losses when it is done incorrectly. That’s why using trading software can be a great idea, because it lets you learn from professional traders.

Experience Real-Time Trading

The use of trading platforms can provide immediate reactions to price fluctuations. It can help you make money quickly and avoid significant losses. If you want to keep an eye on real-time prices, look for a respected software that can help you get the most out of cryptocurrency trading in real-time.

Provide Ease of Use 

Technology offers traders a great deal of ease of dealing with your movements and trading activities. You need a virtual trading floor for cryptocurrencies these days to get you started. Within a few taps, you can execute several tasks right away without having to speak to a broker within-person.

Better Control and Flexibility

The key benefit of cryptocurrency trading platforms is the control and flexibility they provide to traders. You certainly want to do the process at your own rate while trading online. For example, the trading software will give you the option when and where you position your cryptocurrency trade.

 

     Reasons For Trading Cryptocurrency

 

Due to technological advances, cryptocurrency is becoming an alternative to the buying of real coins. Digital currencies such as Bitcoin, Ethereum, Litecoin, and many more have begun to draw the public’s attention quickly. Even in the trading world, these cryptocurrencies have captured the interests of many individuals.

 

Leverage Exposure

Cryptocurrencies are known to be leveraged goods. They allow you to have broad market exposure while at the same time providing a small number of your funds. Due to their leveraged exposure, you can trade on margin offers, allowing you to make substantial profits from a small investment.

 

Business Hours 

The business for cryptocurrencies never sleeps. It’s available 24/7 all year round. This is due to the lack of a centralized market authority. Traders can position their business directly without time restrictions.

 

Volatile

Being highly volatile digital assets, seasoned traders may have a better chance of earning more income due to rapid price movements from time to time. On the other hand, cryptocurrencies volatility always comes with risks. And, before you decide to trade, make sure you’re armed with analysis and risk management techniques to maximize profits and rising losses.

Conclusion

Before you make any decisions regarding investing in cryptocurrencies, it is essential to understand how the process works. In the end, trading platforms will make trading more valuable to traders. So, with the advantages mentioned above, we hope you’ll get some insight into what to expect when you’re using a cryptocurrency trading platform.

 

Tanvi Mittal
author

Leave a reply

Your email address will not be published. Required fields are marked *

four − 2 =