What Are Cryptocurrencies and How Cryptocurrency Trading Works

Cryptocurrency Trading Works

What Are Cryptocurrencies and How Cryptocurrency Trading Works

By now, almost any person with access to internet must be aware of the term “Cryptocurrencies”. If the answer is yes, and it should be, then they would definitely know about Bitcoin (BTC) or Ethereum (ETH). If you do not know exactly what they mean then allow me to elaborate the topic around cryptocurrencies and their trades.

Advent of Cryptocurrencies

Today, almost every person who is linked with online trading knows very well about crypto signals. Even a common person who uses internet for basic usage would also have an idea about cryptocurrencies. However, cryptocurrencies were not always as popular as they are today. In today’s time, cryptocurrencies are one of the major online trading instruments that the traders/investors have available to perform trades and make profits.

It was back in 2008 when the concept of a cryptocurrency was introduced by (still) an anonymous personality known as Satoshi Nakamoto. He is the same person who was responsible for introducing the first-ever cryptocurrency to the entire trading world that is known as Bitcoin (BTC).

Idea behind Cryptocurrencies

Although every country has its own fiat currency, then why someone would need cryptocurrencies and what was main purpose behind the creation of cryptocurrencies. The idea was present by Nakamoto on a white paper where it was told that cryptocurrencies will be fully decentralized, meaning that there will be no intermediary or central governing entity such as banks or other financial institutions.

The idea was to give the ownership of a person’s personal and financial information back to the particular person. It would be the users who would have full authority over the information they would want to share with others and they would not be bound by any restrictions or conditions in order to gain access to such currencies.

Trading Through Cryptocurrencies

When the industry was launched back in 2009 where Bitcoin (BTC) was the first cryptocurrency, it had no value or worth in the market. The main reason was distrust from the mainstream institutions as well as investors who were not into the idea of mining or trading in cryptocurrencies. As it was a unique and new technology, the majority of the investors were skeptical about the industry.

However, with time, the industry started becoming comprehensible and understandable as the cryptocurrency exchanges providing services similar to the ones provided by Forex, Stocks, Indices, or Commodity brokerages.

Today, with Bitcoin price going above 60,000 USD, the cryptocurrency industry is enormous and has a market capitalization of over $2 trillion, which makes it the only industry that is in the $2 trillion pool alongside Apple, the tech giant.

How People Can Trade Through Cryptocurrencies?

There was a time when Bitcoin (BTC) was the only cryptocurrency in the entire crypto-verse but now, there are more than 8,000 cryptocurrencies and each currency offers different prices, demands, valuations, and even unique services.

Over time, cryptocurrency trading has become similar to that of forex trading where the traders used to trade in pairs of fiat currencies. In cryptocurrency trading, the traders have the ability to trade among cryptocurrencies as well as fiat currencies.

Therefore, a person interested in cryptocurrencies can choose a cryptocurrency of their choice and then compare its market price as that of USD or any other currency they prefer. Trading in cryptocurrencies solely depends on how much a person wishes to invest or can afford to invest.

There are people who are investing a hundred dollars at the least and at max, in billions. This is because the cryptocurrency industry has grown enormous and highly profitable in the past couple of years and everyone wants to profit it.

Major Cryptocurrencies to Trade In

As mentioned earlier, there are currently more than 8,000 cryptocurrencies being traded. However, not every cryptocurrency promises to bring in decent profits. This is where one needs to be aware as to which cryptocurrencies they need to invest in.

At present, some of the major cryptocurrencies one needs to look out for are Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), Litecoin (LTC), Ripple (XRP), Polkadot (DOT), and Cordana (ADA). These are some of the most promising cryptocurrencies that investors are going for and have been making huge profits out of them.

Keep In Mind

Although the cryptocurrency industry seems to be flying high and extremely profitable, yet there are always risks. Even if you visit a crypto-trading brokerage, you would find a disclaimer that trading in cryptocurrencies is riskier than forex or any other kind of trading. The major reason is that there is too much going on in the industry every single moment and the industry is too volatile as well as unregulated. This is the reason why, one must always remain cautious and do their homework before they get into trading.

Read more: Cryptocurrency Types & How is it Traded

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