A cryptocurrency is a digital currency similar to currencies such as the USD or Euro.
It’s designed to exchange digital information through an encryption that generates money and verifies transactions. All confirmed transactions of a cryptocurrency are stored in a public ledger or Transaction Blockchain. The ledgers ensure corresponding “digital wallets” calculate accurate balances.
Before using any cryptocurrency you need a digital wallet. Digital wallets secure, store, send and receive digital currency. Major Cryptocurrencies have their official wallet while others use recommended third-party wallets. The actual cryptocurrency is not stored in the wallet. What is stored in the wallet is your private and public keys which allow you to send, and receive coins besides being your personal ledger for transactions.
List of Cryptocurrencies
There are currently over 800 cryptocurrencies. Here are some of the most popular ones.
Bitcoin: Since its inception in 2009, Bitcoin has grown in popularity as an alternative payment and investment option. Its success has seen the emergence of other cryptocurrencies trying to emulate it. It’s currently the highest rated cryptocurrency in market capitalization.
Ethereum: Ethereum is a cryptocurrency and blockchain platform with smart contract functionality. You can use Ethereum to codify, decentralize, secure and trade domain names. The main disadvantage of Ether is you cannot buy goods or pay for services online, but you can speculatively trade with it.
Litecoin: It was designed as the alternative “silver” to Bitcoin’s “gold”. Litecoin is built on the foundation of a peer-to-peer system similar to Bitcoin’s. The main difference is Litecoin’s improvement on the technical front which shortened the time it takes to transfer (2 minutes) in comparison to Bitcoins (10 minutes).
Ripple: This technology’s a combination of both cryptocurrency and a digital payment network for financial transactions. It operates an open source and peer-to-peer decentralized platform which allows a smooth transfer of money in USD, Yen, Litecoin or Bitcoin.
Dash: Dash or Darkcoin is a highly covert cryptocurrency. It’s difficult for most people to trace how or where it’s routed.
A crypto CFD is a contract between the buyer and seller, where the seller pays the buyer the difference between the current value of the crypto asset and its value at the end of the contract. You can use a CFD certificate to store or own cryptos. Here are some of the benefits of using CFDs to trade cryptocurrencies.
Trust: Most CFD platforms have been in existence for many years. Unlike cryptocurrency exchanges, most governments regulate CFD platforms.
Simplicity: You don’t need to find a wallet as you can trade with fiat currency.
Higher fees: Unlike the 0.5% fee for normal crypto exchanges, CFDs can be as high as 5%.
Less privacy: CFDs require more personal identification information in comparison to normal crypto exchanges.
Here is a checklist for CFD brokers.
- The Financial Services Authority (FSA) should regulate the CFD broker
- A broker with a reference or testimonial section on their website has more social proof
- Compare fees charged by different CFD brokers
- Find out the broker’s area of expertise for example indices or global stocks
- Get to know the interest charged on leveraged positions
- Check the broker’s terms and conditions, transaction fees and special offers
With binary trading, you choose the direction of the price and if correct, you gain. You will not risk more than you bet and you don’t have to get the spread or pips correct. You simply predict whether the price will go up or down and set an expiry date to check your trade.
Here are few binary options trading tips.
- Don’t place a short expiry time
- Do not trade in the fiat
- Follow financial market news especially from USA and China
- You can get hints about the prospects for quotes from reading specialized forums dedicated to cryptocurrency
Binary Options Brokers
Here is a checklist for binary options brokers
- Read the broker’s reviews as many make exaggerated claims about their expertise
- Be on the lookout for gambling terms
- Confirm they’re regulated
- Check out their extra features such as a demo account
- The best brokers offer resources to educate you about Forex markets and binary options trading
Cryptocurrency Trading in Forex is similar to trading in any other global currency. There’s bigger potential to gain as wins are based on pip movement which could also translate into a bigger risk of loss. The high volatility of cryptocurrencies makes them highly sought after in the Forex world. However, they come with many challenges in relation to the lack of regulation and technological essence of cryptocurrencies.
Some brokers allow cryptocurrency trade in currencies such as BTC/USD, ETH/USD, DASH/USD, XRP/USD, LTC/USD and ETH/BTC.
Advantages of Forex Brokers
Efficiency: Trading cryptocurrency through Forex brokers eliminates the need to check or place your trades as they already have a trading platform.
Leverage: Leverage allows you to commit a small portion of the whole value of the trade and you will not need the entire amount for actual cryptocurrency trading. As a result, you can trade more cryptocurrency through Forex brokers than through an exchange.
Increased cost of Trading: A broker who offers cryptocurrency trading will deduct some charges in the form of a spread or commission. Other small charges such as holding trades overnight, build up to make the brokerage fees costlier.
The absence of a choice of crypto exchange: With a Forex broker, you have no choice but to accept the exchange they use. This denies you freedom of choice, and you may have to settle for less favorable quotes.
Cryptocurrency Trading Rules
- Some of the best cryptocurrencies to hold on longer than two weeks is Bitcoin and Ethereum
- Don’t buy into a coin after a dump
- Learn and understand the cryptocurrency blockchain
- Study the correlation between Bitcoin and altcoin
- Understand candlestick charts as they offer significant information
- Secure gains and limit losses
- Learn technical analysis as it plays a big role in market movement
Crypto trading can give you an opportunity to quadruple your coins value in the shortest time possible. However, you need to be cautious of fake coins, pump, and dumps, schemes, and Ponzi’s. Due diligence is advisable before you decide to part with your hard-earned cash. At the end of the day, never invest what you can’t afford to lose.