It seems that bitcoin’s valuation of more than $9,000 (USD) shows no sign of stopping its explosive rise. Although the level of enthusiasm for cryptoassets is at an all-time high and retail investors have been quick to put their money on the line, it’s important to be aware of some of the important things that you need to consider before trading bitcoin. Whether you’re a bitcoin newbie or an experienced trader, we have collected this short guide for you to get to grips with the important considerations that you need to make when trading bitcoin.
Understanding the Basics of the Altcoin and Cryptocurrency Markets
Although bitcoin is the most popular and well-known cryptocurrency, it is not the only one. In fact, there are over 1,300 cryptoassets to choose from. This means that although bitcoin is an important part of any crypto asset portfolio, you can still have exposure to other currencies and digital assets. With that in mind, we’ve compiled a short guide on how to trade other cryptocurrencies to give you a clearer picture of how the cryptocurrency market works and what you need to know before putting your money on the line.
Bitcoin and Digital Currency Basics
Before we get started, it’s important to remember that the world of cryptocurrency is rapidly evolving. Although there are some fairly well-known currencies and digital assets that you are likely to encounter as you trade digital assets, it’s important to understand that there are plenty more out there waiting to grab the attention of those that don’t know what they are. We recommend that you read our guide on the basics of cryptoassets to help you get started with the fundamentals.
We’ve already discussed how to trade bitcoin, but let’s quickly recap a few of the key topics you should bear in mind when first getting to grips with the bitcoin market:
What is Bitcoin?
Bitcoin is a cryptocurrency that is powered by a decentralized peer-to-peer network. It has a number of other benefits over traditional currencies, which make it a great choice for its users. Some of the key advantages of using bitcoin are:
Faster transactions for lower fees
A global network of users
Transparency in transactions
Attention to individual privacy concerns
What is Bitcoin Exchange?
For those that are new to cryptocurrency trading, the most important concept to understand is what the bitcoin exchange is. To put it simply, an exchange is a platform where users can buy and sell different cryptocurrencies.
2.1. How Bitcoin Exchanges Work
An exchange offers two types of trading platform. The first is called a bitcoin marketplace, which is where users can exchange fiat currency for bitcoin. This exchange provides the option of price discovery, which means that buyers and sellers are free to trade on a marketplace for bitcoins. You can use a traditional exchange to trade bitcoin on the bitcoin marketplace, but this is usually a limited feature.
2.2. How a Cryptocurrency Marketplace Works
The second type of exchange you’ll be introduced to is called a cryptocurrency exchange, where users can buy and sell bitcoin, bitcoin cash, ether, litecoin and more. In this type of exchange, sellers will use cryptocurrency to send their bitcoin directly to the seller, who can then receive this cryptocurrency in the form of another cryptocurrency or fiat currency. The buyers on these exchanges will do the same, sending fiat currency to the seller, who will then use this cryptocurrency to buy or sell on the bitcoin marketplace. This is more of an automated process, and the buyers and sellers have a fair and equal chance of finding a matching seller.
2.3. Which Digital Currency is Better?
Bitcoin and the blockchain technology that it’s based on has had a great deal of attention over the last couple of years. Many users have been very vocal about their enthusiasm for the technology, and the technology has helped to shape the future of currency. Some individuals however believe that bitcoin does not fully meet the needs of most users. Some of the arguments include:
- The volatility of the cryptocurrency market.
- How difficult it is to purchase bitcoin with traditional currencies.
- The cost of getting started with cryptocurrency.
According to some users, Bitcoin is not an ideal currency for consumers, particularly those that prefer having complete control over their funds.
While bitcoin has certainly been criticized by many people in the last couple of years, it is important to remember that many people see the blockchain technology behind bitcoin as something that is incredibly useful. In particular, the blockchain is likely to be incredibly useful in the future. In the short term however, it’s important to remember that not all cryptocurrencies will be as successful as bitcoin.
2 Cryptocurrency Education
There is certainly a need for education when it comes to cryptocurrency trading. In particular, it’s important to note that these days bitcoin can be purchased and used through a number of online platforms and has become an extremely popular currency for criminals and other nefarious individuals. This means that consumers need to be aware of the risks that they might be taking, and take appropriate steps to protect themselves. This also means that consumers need to be aware of the risks that they might be taking. As you would expect, there are a number of risks involved with any form of trading.
3.1. Is Bitcoin a Safe Alternative to Traditional Currencies?
Obviously, people are highly skeptical when it comes to the safety of fiat currencies. In particular, the recent downturn in bitcoin has led many to question whether or not bitcoin is an efficient form of currency. Bitcoin is constantly in the spotlight with politicians, the press, and ordinary citizens alike, and there are a lot of debates about the future of bitcoin in the context of traditional currencies. If you’re looking to buy bitcoin, there are some factors that you need to consider before making a purchase. These include:
How much the currency will cost in the future.
Cryptocurrency Investment Scams?
In general, the argument surrounding cryptocurrency in the short term is not the same as the argument surrounding bitcoin in the longer term. This is because bitcoin has the potential to alter the way that we use money in the future. This is why it’s important to be very careful when buying bitcoin. Buying cryptocurrency is particularly dangerous, as it’s important to recognize that there are a number of scams that take place. For example, one scam involves “pirates” that pose as cryptocurrency trading companies, offering lower prices than legitimate cryptocurrency trading companies. This is why you need to be vigilant when buying bitcoin. You also need to remember that you can’t purchase cryptocurrency from a random website, and you need to take steps to verify your identity.
3.2. Digital Security
Digital security has been a massive issue in the last couple of years, particularly when it comes to online currencies. At the time of writing, Bitcoin is the most popular digital currency in the world, but its level of transparency is somewhat lacking, and this means that cybercriminals have targeted cryptocurrency exchanges in order to launder money and launder fake currencies.
3.3. Price and Expenses
When considering the amount of money that you’re going to spend on bitcoin, it’s important to remember that a considerable amount of funds are needed to open a new account. This can be a considerable amount of money, especially for people who aren’t entirely familiar with cryptocurrency. To open a new account, it’s a good idea to get a money order to start with, and this can be used to purchase bitcoin over the counter. Alternatively, you can buy bitcoin with fiat currency through an online broker. It’s also important to remember that bitcoin transactions take a number of days to complete. It’s therefore vital that you only use bitcoin when it’s required