The introduction of cryptocurrency marks a significant advancement in the trading world. From its inception in 2009, when Satoshi Nakamoto developed Bitcoins, cryptocurrency has evolved to become a viable alternative to fiat currencies. With the growing popularity of Bitcoins, the crypto market is booming with a variety of digital currencies. Some of the popular cryptocurrencies that are widely used by traders include Litecoin (LTC), Ethereum (ETH), Dash or Darkcoin, Ripple (XRP), Monero and (XMR).
These digital currencies are peer-to-peer payment methods which are regulated by the blockchain technology. Cryptocurrency owes its name to the consensus-keeping process. Cryptocurrencies are powered by cryptography whereby they are entirely free from the intervention of any middleman or trust.
What is a Blockchain Technology?
To put it simply, a blockchainrefers to a database. However, there are many notable differences between the two systems. Generally, a regular database has a particular location. If a company fails to access data due to a server issue, the backed up data can be acquired from only a few specific locations. Interestingly enough, with the blockchain technology, data can be stored on several computers worldwide at a relatively cheaper rate. Since information is present in the encrypted form, files are disintegrated into several pieces. This technology ensures the protection of data – if a single fragment of data is exposed, the file will remain fully secured.
Some Characteristics of Cryptocurrency
Cryptocurrencies have many unique features. Some of their notable characteristics include:
All the transactions made with cryptocurrencies are regulated virtually, so it is impossible traced the transactions back to real identities. A person can access cryptocurrencies only from specific addresses. The transaction flow can be determined but one cannot simply they trace them to the users with these addresses.
The payments made by cryptocurrencies are irreversible. This means, if the user hasconsigned to a transaction, s/he cannot cancel it. Regardless of the nature of the transaction, whether you are a trader, a banker, or a miner, the transactions cannot be reversed. In case you have transferred the funds to a scammer, you lose your money.
With cryptocurrencies, users can enjoy faster transactions. Since all the funds are transferred on the internet, they are not influenced by the user’s location. Whether you are making transactions with your neighbour or a person living on a distant continent, all the transfers will be done instantly.
As discussed previously, Cryptocurrencies are secured with an advanced cryptography system. So, none butan authorised user with a private key can acquire the funds. It is extremely difficult to upset the cryptography system in any way as all the digital currencies are highly protected to ensure safer transactions.
Once a user has an authorised key for accessing these funds, he/she does not require a legal authorisation. As there is no middleman or trust involved in the system, all funds are accessible without any consent. It is fairly easy to access funds –just download the software and install it on the computer.
The cryptocurrencies are regulated by cryptography which controls the dissemination of the tokens. Such tokens are regulated by a specially designed code. Evidently, the value of these tokens at any particular instant can be estimated successfully.
How to trade with Crypto assets?
The following steps discuss the steps to trade with cryptocurrencies.
To trade with cryptocurrencies, you need to first purchase cryptocurrencies. Once you have adequate funds, you can strategise your next move. One good thing about these digital currencies is that investors can buy them in terms of fractions. For instance, instead of buying a whole Bitcoin, you can buy Bitcoin in fragments called Satoshis.
If you are satisfied with your deposits, it’s time to find an exchange. Finding an exchange can be a daunting task as there are many fraud cases reported in the recent time. However, there are many reliable exchanges available today. Explore all the reviews and make an informed selection.
Technical analysis is indispensable to trading digital assets. The trends of the market are always in a flux. The crypto market is relatively new and highly turbulent whereby predicting a trend can be an enervating job sometimes. There are many trading tools and indicators available today, such as moving averages, lagging indicators, candlesticks, etc, which offer a comprehensive overview of the ongoing trends.
Once you have performed a technical analysis of the market, you can move on to building strategies. In the course of time, you will be able to figure out when to buy stocks and when to cash out.
For an average trader, the crypto market can come across as a risky avenue. But it can provide a trader with a plethora of opportunities. If you are adept at analysing the market and are willing to take educated risks, trading cryptocurrencies can be a welcome change. In any case, make sure you have a thorough understanding of the market before you take a leap.