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Bitcoin trading. How Bitcoin trading works

Bitcoin trading. How Bitcoin trading works

Since its launch in 2009, Bitcoin has made quite a splash onto the global financial theater. Many technology and finance experts already consider Bitcoin one of the most revolutionary inventions of the century.

Bitcoins increasing value and availability across the globe have led to the gradual increase of people interested in trading Bitcoin.

Bitcoin trading is a process available on platforms specialized in trade of cryptocurrency. Though transactions are similar to those carried out in foreign exchange markets, the main difference is every aspect of trading taking place entirely online.

In this article, you will learn the concept of trade, factors impacting value fluctuations of cryptocurrencies and get tips on how to trade while maintaining security. Read on!

In this post you will learn about:

  1. What is bitcoin
  2. How Bitcoin Markets Works
  3. Obtaining Bitcoin
  4. Trading Cryptocurrencies
  5. Factors Influencing Value
  6. The Right Time to Buy & Sell Bitcoin
  7. Opportunities & Challenges

What is Bitcoin

Bitcoin is an all-digital currency, created in 2008 by a programmer or a group of individuals using the pseudonym Satoshi Nakamoto.

The biggest difference between Bitcoin and traditional, physical coin based currency is that Bitcoins existence is entirely virtual. No physical representation exists with Bitcoin.

Moreover, there is no interference from banks and government institutions regarding issuance, which makes it a decentralized currency operating without political interference and self interest of national governments.

This means Bitcoin can be bought and owned by users freely deciding the process of trading, buying and selling.
Furthermore, Bitcoins popularization over the past few years has resulted increasing adoption by merchants and service providers accepting Bitcoin as payment.

Today it is even possible to find ATMs for Bitcoin conversion to and from fiat at ATMs located in major cities around the world.

How Bitcoin Markets Work

The Bitcoin market – and all other cryptocurrency markets – work in a 100% virtual way  through a data network. When you buy a coin, you will not have tangible money in your pocket. Instead, these cryptocurrencies are stored in virtual wallets.

Bitcoin is a representation of values inserted in a decentralized network. All issued coins and transactions involving Bitcoin are registered through encryption using a technology called Blockchain.

In order to transfer these coins, the system generates a code for each user/transaction, a signature one might say. This is information verified by miners, who validate transactions.

Once a Bitcoin transaction is accepted, it is incorporated into the permanent, immutable Blockchain and registered. This gives transparency, trust and security to its users.

Obtaining Bitcoin

Currently, there are two ways of acquiring Bitcoins, the first happens by means of “mining” and the second through trade.

Mining Bitcoin now requires a substantial investment of money and time. You would have to research what hardware to purchase and how to use it. A suitable location with adequate cooling and cheap electricity is of utmost importance to efficiently and profitably run your Bitcoin mining operation.

But don’t worry, the second option, trading Bitcoin, isn’t as daunting of a process as mining.

Trading Bitcoin consists of the purchase, sale and exchange of cryptocurrencies. This is used not only for trading of Bitcoin but also for most other types of Cryptocurrency.

Trading primarily takes place at websites called digital currency exchanges. They serve as a meeting point, a marketplace for people interested in buying and selling these cryptocurrency.

As we mentioned, trading cryptocurrency is very similar to that of a stock brokerage, in which two interested parties meet to carry out negotiations involving roles and actions.

Trading Cryptocurrencies

Trading is a process of buying, selling and exchanging Bitcoins for other forms of currencies.

In order to successfully negotiate for cryptocurrency, it is important to know how these platforms work. The criteria for insertion of funds, and fees charged for brokering negotiations.

Each exchange has its specific characteristics. However, in general, we can conceptualize them as sites in which users buy and sell Bitcoin after having registered and inserted funds (for the purchase of Bitcoin), and basic contact information.

It is important to note that trade platforms are not only a means of trading cryptocurrencies. They are also an excellent source of information about the market and news that surrounds the industry.

In practice, anyone interested can buy and sell Bitcoin by simply registering with a cryptocurrency exchange..

Although very similar to the stock market, one of the main differentials of the trade process is that in this type of environment, transactions occur at any time of the day, regardless of the country of origin of the buyer and seller. Because Bitcoin lacks physical constraints, Digital currency exchanges are expected to and operate 24 hours a day, seven days a week to serve a borderless global audience.

One of the most important tips that involves the security and effectiveness of a trade strategy is that users must first do their research on exchange platforms considered. It is common to find complaints involving platforms that do not properly manage the information and funds of their users.

Therefore, to ensure the legality and security of your trade financial transactions, opt for a serious exchange that can guide you and offer all the support to make your purchases and sales efficient.

Factors Influencing Value

Cryptocurrency trade is a relatively simple process. Simply choose a good trading platform and complete the account registration process.

But buying and selling Bitcoins goes a little further than a simple trade. The process involves a number of strategies that aim at achieving satisfactory financial performance for the user.

It is vital to understand the mechanism that creates value for your currency of choice and identify the most opportune moment to carry out trades.
Among the main aspects that influence the value of money which are worth highlighting is the sharing of information by mass media, the development of technology and government regulation.

Mass media is undoubtedly a strong component in the process of currency appreciation, since it is responsible for disseminating information and generating interest for ordinary people towards acquisition of cryptocurrency. In addition, when large companies announce acceptance of Bitcoin, it is natural that currency appreciation occurs.

In this respect, the dissemination of news and the increased demand for that particular asset tends to increase the value quoted.
Technology also impacts on Bitcoins’ value, especially when it comes to technological innovations aimed at cryptocurrency. An upgrade to the Blockchain, for example, is a factor that would positively impact Bitcoin.

The third factor that deserves mentioning is the influence of governments and their actions. Whenever a country’s regulatory body tries to define policies related to the creation and use of cryptocurrencies, it is common to see an oscillation in its quotation.

These changes can be either positive or negative. Usually, the quotation falls when a government tries to create regulations to restrict the use of technology, since the market reacts badly to this type of movement.

The Right Time to Buy & Sell Bitcoin

The big question among users looking to enter into the Bitcoin market is: when is the best time to buy and sell cryptocurrencies?

It is important to keep in mind that each user has different needs and goals. However, taking into account the volatility of this market, buying Bitcoins at a low price and selling them at a higher one may be a good strategy.

The great difficulty lies in the fact that new users with little or no experience may find it hard to pinpoint optimal time to trade. Learning how to using graphing indicators with the swings may help, but keep in mind that Bitcoins’ value can change in a few minutes and the user has hardly any control over it.

Therefore, the experts’ tip is for the user to study the market thoroughly, research information about prospects and opportunities and evaluate changes that may influence the appreciation or depreciation of Bitcoin.

Opportunities & Challenges

The challenge is to take advantage of opportunities while dealing with adversities in such a way that trading becomes beneficial to the user. With that in mind, we’ve touched on a few tips that will help you understand how to improve your trades and make favorable gains based on your strategies.

The first recommendation is to set goals so that it becomes clear where they want to go and how the strategies will be set to reach that objective. For example, you may be purchasing Bitcoin because you need funds to purchase a new computer. This will be your goal as you plan your trades.

Another tip concerns liquidity. Liquidity is a concept that is related to the ease of conversion of a particular asset into cash. With regard to cryptocurrencies, such liquidity depends exclusively on the number of people registered in exchanges interested in the acquisition of cryptocurrencies.

Thus, the higher the number of people trading, the greater the liquidity of the currency and the easier it will be to transact using Bitcoin.

Last but not least, an aspect worth mentioning is profitability. While cryptocurrencies often involve many polemics and concerns, they bring with them excellent opportunities for financial returns. Therefore, trading this type of asset can be a great option for those who want to diversify and achieve their financial goals.

As you could see throughout this article, trade Bitcoin involves several concepts and strategies. Understanding each of them and knowing your goals brings greater security to your trades and assists in effective application of your capital in an effective and innovative way.

Did you enjoy this articles? Was it informative to you? Then sign up at Bleutrade and start your cryptocurrency trading plan with complete security and agility!


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