Bitcoin is a unique crypto-currency and a new financial vehicle, unlike something the world ever saw. There’s a digital frenzy sweeping the world as investors try to go for it, the infamously volatile cryptocurrency. Getting involved is easy and risky too. As with every exchange or speculative market, trading is a dangerous venture that might cost good amount of money. So an important advice is to ensue with caution.
What makes Bitcoin Tradable?
Bitcoin is a currency, although digital, qualifies it for trading. It can be held, bought, traded, invested or stolen. The most extensively circulated cryptocurrency, originated in 2009 by someone (or some people) using the pseudonym Satoshi Nakamoto. It is produced by the process of “mining”, essentially using a computer’s processing power to work out intricate algorithms called “blocks.” Miners earn about25 Bitcoins once block is decrypted. This relies on GPU power. Another method of trading, is to basically exchanging fiat currency at a Bitcoin exchange.
The straight forward response is: like physical currency exchanges. Trader is buying a currency with another. Its value does not come from an industrial economic base but from mining pools. So Bitcoin trading can be done like a commodity, no different than Crude Oil or Gold.The relative value of currencies are a reflection of the nation’s financial health.Its being more valuable than any other existing physical currency, trading can’t be unlimited.
Exchanges like Bitstamp operate as intermediaries for transactions, converting assets from Bitcoin to fiat currencies, and vice versa. And that’s how traders make money. By exploiting the continuously swinging relative values of different currencies, savvy traders can get a tidy sum just by moving money around the markets, that is by arbitrage. But they may easily lose it very soon.
Points to remember while trading
For trading on a regular basis, then traders need to hold some deposits at more than one Bitcoin exchanges. While platform components and special trading options are unique characteristics of exchanges, the reality is that security is the most essential feature to deem while trading in an active wallet. Durability, two-factor verification, with proof-of-reserve factors are the most important features to focus on while choosing an exchange. Lot of traders try to time the market on daily basis, but the buy and hold strategy pays off for the largest number of holders.