Bitcoin trading works almost like any other type of online trading, i.e., forex trading, commodities, stocks, etc. The main difference is that Bitcoin is a cryptocurrency and it trades with other cryptocurrency pairs. Trading and investing are often used interchangeably, and with good reason – both trading and investing entail buying the digital assets for a profit (buying low and selling high). But the main difference between investing and trading Bitcoin is that traders usually buy and sell the assets in a short time frame while the investors prefer buying and holding the items for longer. Bitcoin is a peer-to-peer digital currency that was created in 2009 by an anonymous internet user known as “Satoshi Nakamoto.” The price of Bitcoin has since surged 40,000% and made lots of millionaires in the process – which explains the growing interest in Bitcoin trading and investing.
Simply put, bitcoin trading is the buying and selling of Bitcoin. Trading Bitcoin typically happens on Bitcoin exchanges. However, traditional regulated brokerage firms are now adding Bitcoin futures which allow more risk-averse traders and investors to still benefit from the lucrative Bitcoin ecosystem. The exchange is a digital exchange platform that gives traders and investors a marketplace for buying and selling Bitcoin. When investing in Bitcoin, one doesn’t necessarily have to worry about the other cryptocurrencies. One just buys and holds their Bitcoin and then sells it for a profit when the prices rise. However, traders often have to exchange their Bitcoin for other cryptocurrencies and vice versa. Apart from buying Bitcoin, most reputable exchanges also list other digital currencies that traders can buy and sell.
Bitcoin doesn’t have a single universal price and that is what makes trading it interesting and rewarding. In fact, the price of Bitcoin will vary across different exchanges. Just like any other commodity, Bitcoin prices are influenced by demand and supply dynamics. There are several factors that affect the demand and supply curve of Bitcoin. For instance, if some really bad news comes out, Bitcoin prices will start trending down and major good news will make the prices shoot.
For best results when trading and investing in Bitcoin, it is advisable to familiarize yourself with blockchain technology. Most novice traders mistake the price of Bitcoin for its value but the two are not the same. The value of Bitcoin is determined by its underlying technology. Blockchain technology creates a new way of transiting seamlessly across the nations of the world without any interference or regulation. This is what gives Bitcoin its real value. The price of Bitcoin will keep fluctuating depending on how the users are interacting with it and how much they are willing to pay for it. The best thing about Bitcoin is its scarcity. Since there is a finite amount of Bitcoin that can be mined, its value will continue to go up over the years. Even if you are not very good at trading, you can just buy it and wait for the prices to go higher.