Bitcoin Financial Trading Guide
Bitcoin seems to be on everyone's lips these days, but is all the fuss really worth it? To the uninitiated, Bitcoin trading may sound like a dream job as you can operate from home, set your hours and potentially make money by simply clicking a mouse.
Truth be told, Bitcoin financial trading can be extremely profitable for both professional and novice traders, and since it is a new and highly fragmented market, traders can expect huge spreads.
That being said, Bitcoin trading is as volatile as any trading on the market, and interested parties need to know as much as they can about the digital currency before you make any commitments.
Bitcoin mining is the process of generating Bitcoins. Because it is a decentralized process, it relies on the power supplied by millions of miners around the world who join the mining network using specialized hardware.
This processing power is used to process transactions in the secure Bitcoin network, and while this method is used to create Bitcoins, this cryptocurrency is created at a decreasing rate until a total of 21 million Bitcoins is reached. Trading in Bitcoin is a different beast as you are simply buying one currency with another as a way to make passive income.
The same principles apply when trading Bitcoin as any other currency in a forex market, which means its value depends on the same market forces as other currencies.
Recommended Sites for Bitcoin Trading
- AVA Trade
What's more, Bitcoin is also a popular option for binary traders due to its high volatility. Just like CFD's, there are a variety of binary options available for those looking to trade Bitcoin. Anyoption.com and Predictious.com are some names worth checking out for your Bitcoin binary trading needs.
What is Bitcoin?
Bitcoin is a virtual currency that was launched in 2008/09 by an unknown person under the alias of Satoshi Nakatomo. During this time, many vendors and individuals were wary of this new and untested currency, although as time went on, it grew in value and is now one of the most sought-after digital currencies in the world.
Nakamoto collaborated with many developers on the open source team, but never revealed his identity, unless he completely disappeared from the scene in 2011. By then, his peers understood the value of Bitcoin and worked to develop it to its maximum potential.
Compare that to how expensive Bitcoin is today and you will understand how far the cryptocurrency has come. Bitcoin traded at this price for some time before things changed in 2010. The distribution of the currency increased and its value grew more and more each day.
This soon caught the attention of traders and the demand for Bitcoin grew, which reversed the exchange rate accordingly. By November 2010, 4 million Bitcoins has been mined, and it continues to grow at an alarming rate.
How Bitcoin Financial Trading Works?
Bitcoin is the first cryptocurrency to be launched into the market. It is the most valuable and respected virtual currency in the world. Bitcoin trading is one of the most active, booming industries in the world thanks to its volatility. This allows for maximum financial returns and major opportunities for global traders.
The potential to make a profit on volatile markets make Bitcoin a favorite amongst currency traders all over the world. It's safe to say that the media largely contributes to Bitcoin's volatility, so whenever there is a breaking news story, expect the volatility of Bitcoin to increase and traders to cash in.
The currency is, therefore, becoming one of the best payment options for transferring money and trading as more and more traders turn to Bitcoin. Due to the high demand, Bitcoin is the most valuable cryptocurrency available even though it has no involvement from government or central banks.
Bitcoins are generated using powerful hardware and software tools, and only 21 million will be made available, making it highly sought-after. Once it reaches this number, no more Bitcoins will be produced, as a highly sophisticated algorithm governs Bitcoin's production, limiting the quantity and the rate at which they are produced.
Because of the fixed amount, Bitcoin is in great demand with prices guaranteed to rise, making it similar to finite commodities like silver and gold.
Advantages to Bitcoin Financial Trading
There are many reasons to not only use Bitcoin, but also start trading Bitcoin. In fact, when it comes to trading, Bitcoin is far superior to other instruments likes stocks, Forex or commodities. Some of the best advantages of Bitcoin financial trading include:
Large price moves is what the average trader needs to make money. That being said, this is more common in Bitcoin trading that any other instrument. Traders may therefore avoid the increased risk and expense of leverage strategies and instead benefit from smaller moves.
Usually, stocks and commodities only trade during business hours, while Forex markets are closed over the weekend. Bitcoin financial trading remains active 24/7. There are no official Bitcoin exchange and no official Bitcoin price, but instead, there are hundreds of exchanges across the world. This can be beneficial as it can create plenty of opportunities, although most times they remain in the same general price range.
Bitcoin exchange fees are relatively low compared to other exchanges. Bitcoin deposits and withdrawals can be performed within hours anywhere in the world, and since this digital currency is decentralised, there is no need to provide any personal information during exchanges.
The ever-changing world means that traders are always looking for the next big thing, and Bitcoin seems to be it at the moment. Bitcoin financial trading has taken the industry by storm as the digital currency becomes increasingly valuable and in high demand. While the market remains volatile, it will be interesting to see exactly how Bitcoin continues to grow in the future.