The innovations brought by the blockchain technology had come under increased public attention thanks to its transparency and decentralization. Cryptocurrencies emerged, with Bitcoin as a pioneer, since 2008 and the idea of digital money gains significant traction among technology savvy people, who believe in a fully digitalized world.
However, we know that as will the money we have right now, there are positive and negative aspects which need to be well-known, and properly dealt with. That’s the main reason why today we will talk about cryptocurrency trading and what you need to know about how to trade Bitcoin or any other major tokens.
Why is cryptocurrency trading more reliable?
Traditionally speaking, we have exchange platforms specially designed for cryptocurrencies, where people can transact. However, since the industry is relatively new, we continue to unclarity in terms of regulation and security concerns, which had unfortunately led to some big Bitcoin thefts and exchange hacks in the last few years.
Alt text: trade Bitcoin
Risks associated with hot wallets, which store private keys on online servers, have made people still interested in cryptocurrencies to search for alternative solutions.
Trading cryptocurrencies with traditional brokerage companies exclude the risk of being hacked. Most of the regulated brokers are regulated and they need to keep clients’ funds in segregated accounts.
Although digital money had been advertised as a fast way to transfer money anywhere in the world for very little fees, that also proved to be very limited. Transferring funds from a cryptocurrency wallet to an exchange can take between a few minutes to a few hours if there are a lot of transactions pending on the blockchain.
With a $120 billion global market cap, according to the latest figures available on coinmarketcap.com, liquidity in the cryptocurrency market is very thin, if we compare it to the stock market or the forex market.
Thin liquidity leads to higher volatility and for the past two years we’ve witnessed how quick the prices can change. If you want to profit from these price movements, you need to be able to buy and sell with split-second execution, which is not easy to do on a traditional cryptocurrency exchange.
As a result, cryptocurrency trading represents a safer, regulated, and faster alternative to profit from price variations. Still, that does not guarantee success. The blockchain technology is a very complex subject and its applications are various. One should have an in-depth understanding of the technology, how it is implemented and how it could generate added value for a business and cryptocurrency over the long term.