If you are looking for a way to make easy money on the markets, consider your options carefully. There is a wonderful Afrikaans expression, ‘Goedkoop is duurkoop’. When translated it simply means anything that you buy cheaply ends up costing you a lot more in the long run. Fortunately, Bitcoin is anything but cheap. But before we get into the nuts and bolts of Bitcoin trading, it’s important to learn a little bit about the difference between fiat currency and cryptocurrency.
Is Bitcoin Trading Your Get Out of Jail Free Card?
Fiat currency has nothing to do with the automobile manufacturer – it is the term given to all currency regulated by governments and produced by central banks. Fiat currency includes the USD, GBP, EUR, JPY, ZAR, CHF, SEK etc. The world is full of fiat currency; it’s the paper money that you have in your wallet, the coins you keep in your piggy bank, and the money that’s in your bank account.
Most financial transactions today are processed with fiat currency. Currency pairs trading such as the Cable (GBP/USD), the Dragon (GBP/JPY) and scores of others abound. These currencies are easily identifiable, since they are the official currencies of their respective countries. Things get a little more complicated when we consider alternatives such as digital currency.
For one thing, you cannot physically hold digital currency in your hand – it’s a computer code. The most well-known digital currency is Bitcoin, which goes by the ticker BTC. Bitcoin was created by an individual, a group of individuals, or a computer program with the pseudonym Satoshi Nakamoto. We don’t know the identity of this nom de plume, suffice it to say that this complex mathematical algorithm has developed the world’s most valuable cryptocurrency.
1) The same market forces drive Bitcoin demand
What makes BTC so valuable? People like you and I. Supply and demand. Bitcoin runs on blockchain technology. This peer to peer system eliminates the need for third-party intervention and is virtually impregnable safety wise. What does this mean in practical terms? Firstly, BTC transactions are relatively anonymous, commission free, regulation free, and do not require the services of banks or financial intermediaries. This makes them highly efficient and preferred among traders, individuals and businesses.
Today, more individuals and e-commerce sites are accepting Bitcoin, Litecoin, Dogecoin and Ethereum than ever before. Since only 21 million BTC will ever be created before the algorithm stops producing any more, it is a finite resource with incredible demand potential. Take for example the recent highs experienced by BTC on the international currency markets. The price exploded above the $3,000 per BTC level on exchanges recently. It has since retreated towards $2,700 per BTC, but this is extraordinarily high for a currency that is not backed by anything other than market factors.
2) Is it too late to cash in on BTC trading?
If you’re wondering how to trade this cryptocurrency, there are many options available to you. Had you cashed in on the BTC phenomenon when it first exploded onto the scene in 2008/2009, you would’ve been able to purchase an entire BTC for mere fractions of pennies. Less than a decade ago, $100 worth of Bitcoin would be worth millions of dollars today. Some people had the wherewithal to make such investments in the infancy stages of this cryptocurrency’s development. Today they are smiling all the way to the bank.
This begs the question: Should you cash in on the BTC market when prices are so high? Fortunately, this is one of the most volatile digital currencies in the world. This means that prices can fluctuate hundreds of dollars overnight, making buying on the dip a viable proposition. In terms of trading possibilities alone, BTC is quite appealing. You could buy at $2,200 and watch the currency appreciate to $2,700 within hours. Your Bitcoin trading options are not limited to one site or another, although there are better trading platforms that you can approach.
It’s important to understand what drives cryptocurrency trading. The rapid rise of e-commerce giants like Amazon and Alibaba will invariably determine the success of digital currency. As more online retailers and individuals start accepting digital currency as a de facto form of payment, the trading value and investment value of this financial asset category will go through the roof.
Several leading analysts have forecast that the cryptocurrency could reach several thousand dollars per coin more than the current level. If this is true, you’re talking hundreds of percent returns – something you hardly ever see on stock markets, or with traditional Forex trading. Whether BTC hits that magical $50,000 number is anyone’s guess, but one thing’s for sure – it’s not going to be plain sailing. This is an extremely volatile financial asset class, and you should remember that in your BTC trading exploits.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.