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Could You Trade a Cryptocurrencies?
Written by: PaxForex analytics dept - Wednesday, 18 October 2017 0 comments
Cryptocurrencies are digital currencies which operate independently of banks and governments, but can still be exchanged – or speculated on – just like any physical currency. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance. Cryptocurrencies use decentralized technology to let users make secure payments and store money without the need to use their name or go through a bank. Today cryptocurrencies have become a global phenomenon known to most people.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It is completely decentralized with no server or central authority. The single most important part of Satoshi‘s invention was that he found a way to build a decentralized digital cash system. Cryptocurrencies and applications of blockchain technology are still nascent in financial terms and more uses should be expected. Transactions including bonds, stocks and other financial assets could eventually be traded using the technology.
The cryptocurrency market is insanely volatile here in 2017. You can make a fortune in a moment and lose it in the next whether you trade Bitcoin, another coin, or the GBTC Bitcoin trust. Consider mitigating risks, hedging, and not “going long.” TIP: If you trade only the top 3 or so coins (that is Bitcoin, Ethereum, and Litecoin), or GBTC, then the chances of losing everything overnight are
slim (not impossible, but slim). Other cryptocurrencies are more risky.
Cryptocurrency trading can be extremely profitable if you know what you are doing, but it can also lead to disaster. Even though most traders decide to either go with fiat or Bitcoin, other cryptocurrencies can represent viable income sources, as long you as you tread carefully and understand what you are doing. Bitcoin and Ethereum CFDs offer a possibility to trade on the cryptocurrency market without the need of owning any coins at all. A crypto CFD is a contract between the buyer and seller, where typically the seller will pay to the buyer the difference between the current value of the crypto asset and its value at end of the contract. CFD certificates are typically used on goods (derivates) that are hard to store/own like gold, oil barrels and in this case cryptos.
The cryptocurrency market changes very fast, new cryptocurrencies are born and others disappear. What draws people to the world of cryptocurrency is the idea of protecting themselves against the devaluation of their own national currency. There are different factors that push the price of cryptocurrencies up or down. To start with, the higher the demand the higher the price will be. Also, the purchase of the coin by traders purchasing on speculation can affect the demand and therefore the price.