Cryptocurrency is quite a popular investment and trading choice these days, and has even become a full time profession for many. A lot of us are starting trades before even gaining the technical know-how as to how the cryptocurrency trade works. It is like going with the flow without bothering on the nitty-gritty, as the process of how to start a cryptocurrency trade is really simple. But still, if you want to be a long-term player, and to make huge sums of money out of this trading platform of digital currency, you need to first understand how the system works.
Cryptocurrency Trade Mechanism
If you ask someone what a cryptocurrency is, I am sure 70% of the answers would be one word, “Bitcoin”. Nevertheless, Bitcoin is only one type of cryptocurrency. Actually cryptocurrency is like a triangle that has three sides to it. One, it is a digital currency or an asset that is designed to function as a medium of exchange and uses very strong cryptography or encoding. Second it has a self-replication process associated with which it multiplies and controls the formation of additional units of the currency on the exchange, and third it has a mechanism for verifying the transfer of this currency, or the ownership of this currency.
With that said, let us now see how the cryptocurrency trade works.
For a cryptocurrency trade, you need buyers, sellers and an exchange where to buy and sell the cryptocurrency. Of course you can churn out your own cryptocurrency, however, the speed is so slow and the computational machine is to be so powerful, that it is not worth the effort. People buy and sell this currency on exchanges, and they make profits while trading which further motivates them to enter into more cryptocurrency trade.
In order to buy and sell, you will need an exchange wallet, maybe one or more depending upon your trade, where you can have your cryptocurrency deposited and collected. Cryptocurrency is first bought by giving in fiat money, and can be withdrawn as fiat money at any time, giving up the digital currency stored in your exchange wallet.
There are transaction fees and transaction times involved when you enter a cryptocurrency trade, which can make or mark your profits. So always factor in these two components when you are to enter some cryptocurrency trades. And this is the reason why people prefer one exchange over the other, because of the difference in these two parameters.
Cryptocurrency trading also offers a mechanism for funding for startups with IEO and ICO modes. IEO has gained quite an acceptance since its launch in the late 2018, on the Binance Launchpad, and is a popular choice among new startups to raise funds.
Major chunks of the cryptocurrency trade is carried out via platforms these days, which are mostly online, like executium.com. Investors like to avoid the hassle of trading directly with exchanges, overriding all the associated minuscules, and hiring experts who provide both consultancy services and operational services for a cryptocurrency trade.