Bitcoin, abbreviated as BTC, is the world’s most popular and highly capitalized cryptocurrency. It was not only the first, but currently accounts for about two-thirds of the entire value of all virtual currency in existence. At any given moment, for example, the amount of BTC in use is equal to about $600 million. That’s larger than the gross domestic product (GDP) of every nation in the world except for the 20 largest ones.
How can you buy and sell this interesting new kind of virtual money and aim to earn a profit, just as you would when you trade stocks, forex, or other assets? The best way to understand how to get involved in the fast action of the cryptocurrency markets is to take a closer look at exactly how Bitcoin works. Here are the key facts.
1. Cryptocurrency Is Not Issued by Governments
All of the major cryptocurrencies are independent of national governments and are based on a collective, agreed-upon value at any given minute. Blockchain technology is behind the verification of every transaction that takes place. Even though you don’t need to understand all the technical underpinnings, it’s vital to know that BTC is not tied to any nation’s economy, fluctuates in price quite significantly, and is growing in popularity among consumers, merchants, investors, and traders.
2. You Trade BTC As You Would Other Securities
There are two main ways to buy and sell this new form of currency. First, you can use a cryptocurrency exchange to buy BTC, and sell it for a profit if the price goes up. You can keep the coins on the exchange, or store them in your own cryptocurrency wallet.
Second, and even simpler, is to tradeBTC against the US Dollar with a CFD, or contract-for-difference, via online brokers like easyMarkets. This technique gives you the flexibility of getting in and out of a position without having to use a crypto wallet. Plus, when using a CFD, you can speculate on the price movement up or down, giving you more flexibility to take advantage of market volatility.
3. There’s a Lot of Price Action
For some people, the main attraction of Bitcoin is its price volatility. In just the past year there have been several historic rises and falls in the value of the virtual coin. Whether you choose to speculate on major ups and downs, or if you view crypto in general as a long-term store of value in uncertain times, the choice is yours. The versatility of Bitcoin offers multiple benefits to different types of investors and traders in the market.
It’s Wise to Study the Crypto Markets
Whatever form of crypto intrigues you, it’s imperative to study the short-term and long-term price changes and get a feel for what causes value to rise and fall. This question is currently a hot topic among economists and academic types. You’ll no doubt come to some of your own conclusions as you become involved in this exciting, round-the-clock marketplace called cryptocurrency.
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