In the field of cryptocurrency, one form leads the way. Bitcoin is a digital currency that is electronically held and traded the world over. It isn’t printed like pounds or dollars, as it is digitally created via “mining” and distributed via trading platforms and online transactions. Bitcoin can be used in the same way that normal currency can, to do everything from paying bills to online shopping. However, what separates Bitcoin from other currencies is the fact that it is decentralised. No single nation or institution controls Bitcoin, which is this day and age is unique, and this has endeared many to the Bitcoin currency platform. Much like any other currency, people can trade Bitcoin if they choose to, but you (like many) maybe left wondering how exactly you do it.
How do Bitcoin Exchanges Work?
Many believe that due to the level of technology involved, that Bitcoin exchanges are too complex to get to grips with. However, such thought process couldn’t be more wrong, as Bitcoin operates just like any other physical currency exchange. When you trade Bitcoin for all intense and purposes you are buying one currency with another. The differences come with regards to the fact that Bitcoin doesn’t have a nation controlling it. Bitcoin’s value comes from the work performed by the computer it is “mined” from, such is quite complicated to explain in detail, but the outcome allows Bitcoin to become a tradable commodity. Exchanges such as Mt. Gox (the leading Bitcoin exchange) act as an intermediary for any currency transaction. They convert Bitcoin to US Dollar and vice versa, which is how you can make money. By operating with Bitcoin in the same fashion as you would other currency, by monitoring shifts in the relative values, you can make Bitcoin a functioning trading commodity.
Risks and Rewards
Compared to other currencies, Bitcoin is new and thus does not offer the same degree of history, control and measurable statistics. Conventional currency markets often trade in the currencies of profitable or previously noteworthy countries, all under a controlled a moderated environment. Where Bitcoin does not, volatility is common and prices can swing wildly during the course of a trading day. Trading Bitcoin is not for novices, as huge losses can happen if you don’t have your finger on the button, a prime example of this would be the losses posted by individuals on the day that China issued a ban on Bitcoin use. But, as experienced professionals (specifically day traders) will tell you, with risk can come reward should you choose to trade Bitcoin.
If you are currently looking to trade Bitcoin, then there are reasons to be optimistic. Stats show that the market is increasing in popularity, with more users adopting Bitcoin as a forward thinking way to trade. Regulation is also on the way to reign in the wild side of Bitcoin trading and give it more mainstream appeal. Trading Bitcoin in the days of modern web and mobile operated platforms couldn’t be easier, along with the chance to create your own Bitcoin funds from scratch, it is a currency that puts you in control.