Bitcoin has been a prominent name in the financial world over the last few years thanks to its strong price advance. This article will tell you how to trade and make profits from this cryptocurrency.
What Is Bitcoin?
Bitcoin is a new kind of currency which was first published in 2009 by an anonymous person called Satoshi Nakamoto. The most prominent advantage of Bitcoin compared to normal currencies is low-cost since transactions via the Bitcoin network are made with no middleman. Thanks to that, this cryptocurrency has quickly been appreciated by people.
Nowadays, there are many companies that accept transactions using Bitcoin. You can use it to shop for furniture on Overstock, to buy Xbox games, or to book hotels on Expedia. Howbeit, people mostly buy the cryptocurrency with the hope that its price will increase in the future.
In 2017, Bitcoin has towered above $20,000, but thereafter it has gradually been decreasing and now is trading around $6,300.
How to trade Bitcoin?
There are two ways for you to trade Bitcoin: using a crypto exchange like Bitcoin Trader or trading CFDs via a Forex broker. The details are as follows:
1. Trading Bitcoin via a crypto exchange
With this way, you will have to choose a trusted crypto exchange and open an individual account. There are a variety of reliable exchanges in the market, and the most outstanding names in 2018 include Coinbase, Coinsquare, Kraken, Cex.io, and Shapeshift. Each exchange has different requirements and trading conditions so you should use the following checklist to opt:
- Reputation: You can check an exchange’s reputation by researching on the internet through reviews from individual users and well-known industry websites. You can also ask about an exchange on large cryptocurrency-related forums such as BitcoinTalk or Reddit.
- Fees: Make sure to check fees charged by the exchange, including deposit, transaction and withdrawal fees.
- Payment methods: Check what payment methods the exchange offers. The more options available, the better. The payment methods that most crypto exchanges provide include Credit/Debit Card and Wire Transfer.
- Verification requirements: Make sure to check and complete the exchange’s verification procedures before starting trading.
- Geographical Restrictions: Check whether the exchange provides you with a full access to all functions in the country you are living in.
2. Trading Bitcoin with a Forex broker via CFDs
A contract for difference (CFD) is an arrangement to exchange the difference in price of an asset between two parties for a specific period of time. You can use CFDs to speculate on the price movement of various financial markets, including forex, commodities, indices, bonds, shares, and cryptocurrencies.
To trade Bitcoin CFDs, you also have to choose a reputable forex broker and open a trading account. You can use the checklist above to check a broker.
The Advantages of Trading Bitcoin via CFDs
Compared to trading with a crypto exchange, trading Bitcoin using CFDs is much more advantageous. Below are the outstanding points:
- CFDs allow you to trade Bitcoin without actually having to own it.
- To start trading Bitcoin on crypto exchanges, you will have to complete lots of complex procedures. Meanwhile, forex brokers only require a few simple procedures to start.
- CFDs are low-cost.
- With CFDs, you can benefit from both upward and downward movements of Bitcoin.
- Most forex brokers are regulated, while crypto exchanges aren’t. Trading with a licensed broker is definitely safer than trading with an unlicensed one.
- At forex brokers, you can use leverage to magnify your gains.
We have just shown you the 2 popular ways to trade Bitcoin. Which way you choose is up to you; however, we suggest you should use CFDs to trade Bitcoin since this way is much more beneficial. Besides, you should also equip yourself with sufficient investment and trading knowledge before going live with this cryptocurrency since Bitcoin is a volatile asset.