Bitcoin has gained quite a reputation over the years since its inception. Nowadays, more and more organizations are slowly making a shift towards accepting bitcoin as a mode of transaction as well. And since Bitcoin has emerged as a possible great mode of transaction, it is clear that Bitcoin trading has become quite commonplace as well.
Now, what is bitcoin trading?
Bitcoin trading works in two ways – either you buy bitcoin at a certain value and then sell it, or you speculate the value of the bitcoin without owning the bitcoin. CFD is when you speculate and not own a bitcoin. It helps you trade a specific contract based on the prices of the product in the market. So, by placing a small investment, you can gain a lot from it. However, you can also incur massive losses too.
Before you enter into bitcoin trading, you should know how bitcoin prices work. The fluctuation in bitcoin prices takes place due to the following:
Supply of Bitcoin – Bitcoin mining takes time and there is limited supply of it in the market. Around 21 million can be mined by around 2040. However, the current flow of bitcoins in the market will move the price.
Market Cap – Much of the trading of bitcoin depends on its popularity in the market. If it looks valuable, traders will try to get into bitcoin trading, or else, they might leave it and make the market go stagnant.
Reputation – Public opinion on a currency affects the value of the currency. Due to lack of stability and proper value, bitcoin values tend to fluctuate.
Integration and Industry adoption – Bitcoin is still not adopted widely. Hence, unless a currency is integrated into different uses like crowdsourcing or if it is not adopted on an industry basis, then the value tends to not rise.
Lack of fiat value- You have to understand that bitcoins do not have fiat value, that is, it is not under a single government. As a result, many specific events can have a major impact on the value of bitcoins. Some specific events that already had an impact on the bitcoin value are Brexit, the election of Trump, and even the Indian demonetization. So, random events can have a major impact on the bitcoin market and value.
What are the goals of a bitcoin exchange?
Bitcoin exchanges help to act as a portal, which converts bitcoin into fiat money. It works like a stock exchange, only here, the stock is replaced by cryptocurrency tokens. Generally, there are two kinds of exchange: a) Crypto-to-crypto exchanges. b) Fiat-to-crypto exchanges.
An exchange works on a few goals too. These specific goals are:
- Trying to make the interface and the process user-friendly.
- Offering amazing prices at competitive rates.
- Create a platform shared by both professional as well as experienced crypto traders.
How do Bitcoin exchanges work?
Bitcoin exchanges work similar to normal trading exchanges where buyers buy cryptocurrency and sellers sell it. You need an account in an exchange, however. There are some few differences:
- Bitcoin exchanges are not properly regulated and do not have the infrastructure to support any requests.
- The servers and matching abilities are not very reliable.
- Many bitcoin exchanges might impose additional charges in the form of fees.
However, you don’t have to worry about so many things if you choose to go with the bitcoin trader platform on InsideBitcoins.