How Is Cryptocurrency Traded?
Simply put, trading of cryptocurrencies is the speculation of price movements of the cryptocurrencies through CFD account or selling underlying coin(s) or buying new coin(s) through an exchange.
Buying And Selling Of Cryptocurrencies Through An Exchange
To trade in cryptocurrencies, one needs to make an exchange account, input the total value of assets in an open position and deposit the tokens in their wallet until they want to sell.
When one buys a cryptocurrency through an exchange, they buy the full or part of the coin itself. In comparison, when one trades cryptocurrencies using the Bitcoin Loophole or similar platforms, there is one purchase of assets, it is cheaper, and involves trading on the price changes.
Exchanges have their own methods and one needs to understand the technology used in them and learn how to figure out the data. Many exchanges impose limits on the amount that you can deposit because these accounts can be considerably expensive to maintain.
How Do Cryptocurrency Markets Work?
As we know that every cryptocurrency is decentralized, so are their markets. Meaning they are not backed or issued by any central government.
Instead, they are code controlled, meaning they run across computer networks. Nevertheless, all cryptocurrencies can be sold and bought through online exchanges and can be stored in ‘wallets’.
Contrary to traditional currencies, each cryptocurrency exists only as a code or a digital record of ownership that is stored on a blockchain. So when a user has to sell a cryptocurrency, they send it to other users’ – buyers’ – digital wallet address.
However, a transaction is not considered complete until everything is verified and added in the blockchain through mining. It is how new cryptocurrency coins are normally created.
What Is Blockchain?
Blockchain is the shared digital record register of data. In the case of cryptocurrencies, it is the complete transaction history for each unit of the cryptocurrency. It shows how ownership of a cryptocurrency changed with each transaction.
Blockchains work by adding new transaction records in the form of ‘blocks’, new blocks are added at the front of the blockchain.
How Does Cryptocurrency Trading Work?
By using IG you can easily buy or sell cryptocurrencies through a CFD exchange account, some derivative products allow you speculation on your chosen cryptocurrency’s market fluctuations. Price values are mentioned in the value of a similar amount of traditional currency like the US Dollar and you cannot have ownership of any cryptocurrency itself.
CFD is a leveraged product, meaning you are allowed to open an exchange account for as small as a fraction of the full value of trade. A leveraged product can magnify your profits, however, it can also magnify your losses if the market were to move against you.
How Many Types Of Cryptocurrency Wallets Are There?
Mainly, there are five types of cryptocurrency wallets that are mobile wallets, paper wallets, hardware wallets, desktop wallets, and online wallets.
However, if you are trading in cryptocurrency through a CFD account, you do not require a wallet. Basically, you need a wallet to send or receive and store cryptocurrency tokens.
Some Secure Bitcoin Exchanges And How They Work
The largest global Bitcoin broker (BTC) is Coinbase. They provide a fast and easy way for users to buy Ethereum, Bitcoin, Litecoin, and other cryptocurrency tokens. They provide their services in over 30 countries like Europe (excluding Germany), UK, the US, Singapore, Australia, and Canada. Customers from the mentioned countries can buy cryptocurrency tokens by bank transfer, debit card, SEPA transfer, and other methods.
The pros of using Coinbase are that they offer an easy process for new users to buy cryptocurrencies. They provide an “Instant Buy” option through a debit card. They have high buying limits and liquidity. However, the purchase of cryptocurrency made through bank transfers can take as much as 5 days to finish. And Coinbase may keep a track of where and how you spend your cryptocurrency.
One of the most trusted and secure Bitcoin trading sites is CEX.IO. It was originally founded in London as a cloud mining platform but has not pivoted into a Bitcoin trading platform with a high level of security. Not only does it provide services in a lot of countries around the world but is also designed in a simple, easily understandable manner.
CEX.IO charges a considerably low trading fee, around 0-0.25%, as compared to a lot of other exchange platforms and it also has helpful features. It provides and supports a variety of payment options so that it is convenient for a larger audience to trade in Bitcoin. CEO.IO also places a lot of importance on the security of funds and user information.
They have various policies in the application, KYC (know your customer) being one of them, it is about knowing and verifying the identity of users. Another of such policies is AML (anti-money laundering) to ensure that no illegal activity takes place on the exchange platform. These and other policies are designed to offer high security to users and maintain its privacy. CEX.IO also enables its users to add two-factor authentication in their accounts to increase the security even more.
While Bisq isn’t as known as others on the list, it is a secure platform that deserves to be brought more attention to. It is an open-source and fully decentralized Bitcoin exchange. Meaning, anyone from anywhere on the planted with a Bisq account can analyze or check the code. Also, the platform never manages or controls its user’s funds.
This is because all funds are stored in highly secure wallets that are fully controlled by users only. With the presence and applications of all these features, it is understood that Bisq puts a lot of importance on security. Besides what is mentioned, all information is private and the exchange platform is fully available instantly with no need of proving your identity or registering with an authority.
Yet despite all these security and other features, Bisq remains easy to use and provides a simple, user-friendly experience to newcomers. Whereas it does not have all the other features provided by every other Bitcoin app, it is one of the best choices to go for if your main concern is security.
Established in 2013 in the USA, Bittrex quickly made a name for itself in the affairs of cryptocurrency. They have a lot of cryptocurrencies enlisted on the exchange program and the platform is also great to use as a Bitcoin trader app as well. In the light of the knowledge that Bittrex was founded by three professionals who worked in the online security department at Microsoft, it is no surprise that the platform’s security is the main concern for them.
Along with two-factor authentication, the platform uses various levels of security and regularly updates their privacy and security policies to ensure safety. Bittrex stores most of the currencies in cold storage systems, which are less vulnerable to attacks or hacks. It means that most funds are held offline until needed for transactions.
Kraken is also an American Cryptocurrency trading program that has recently grown to fame. The look of the platform is great, it also supports various cryptocurrencies and has good performance. However, the security that Kraken provides is what has made it incredibly popular with users.
Along with stabilizing and securing the funds it holds, Kraken also complies with rules and legal standards. Each account on Kraken can be secured with GSL and 2FA. These features of security minimize an account’s vulnerability to get accessed by hackers and interfere with the settings.
Semi cold or cold wallets are used to store most of the coins on Kraken, with “hot” or online coins being essential to fund and maintain the operation of the platform itself.
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|Support Types||Email, Chat
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|Deposit & Withdrawal Methods||Visa, Maestro, Master Card, Diners Club, SWIFT|
|Number of Assets||100+|
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