The cryptocurrency market is booming nowadays as Bitcoin is heading for new highs, according to major investors. The digital coin was first launched in 2009 and slowly grew from zero to over $60000. Bitcoin is traded as a digital currency in the form of data, and you cannot hold the asset physically in your hand like gold or other instruments. It also does not have any influence from governments and banks as it comes under a decentralized authority. Bitcoins are produced and stored in a ledger system which is called a blockchain.
Advantages of Bitcoin Trading
Some of the advantages of trading bitcoin can be listed as follows:
Disadvantages of Bitcoin Trading
There are a few drawbacks to bitcoin trading as well that are listed as follows:
It is possible to lose your bitcoins if the wallet or the hard drive containing the coins gets corrupted.
How can you trade Bitcoins?
Trading bitcoin is relatively easy and can be performed in a few simple steps. At first, traders will have to open an account through a regulated broker. Signing up is easy and will require a few minutes of your time. Some brokers need customers to verify their credentials due to their KYC policies in Bitcoin trading South Africa. After verification, traders can proceed to deposit funds using the available methods. As soon as the money shows up in your account, you can start trading.
Important Terminologies in Trading Cryptos
There are a few essential terminologies that may differ from other markets that traders should know about Bitcoin.
A bitcoin wallet is used to store the cryptocurrency and is protected with the help of a private key. It is a type of digital household that traders can use to receive their cryptos and send them. These wallets are considered a safer option in regards to online ones.
Bitcoin mining is a good way to earn passive income with an average amount of investment. It requires a GPU Or an ASIC with enough mining power. The hardware solves the complex mining puzzle, which maintains the ledger of transactions, and in reward, the trader receives a portion of the cryptocurrency. There are farms that contain hundreds and thousands of miners involved in the function of mining 24/7/365.
Strategy and Algorithms
A solid strategy that has proper risk management is vital in terms of trading cryptocurrencies. Nowadays, various algorithms are being developed to trade Bitcoin and other digital assets. These robots or expert advisors might be semi, or fully automated and are capable of high-frequency trading, which is impossible with manual execution.
Brokers and cryptocurrency exchanges are used for trading bitcoin and other digital instruments. It is vital to select the proper brokerage to ensure that you are not cheated. Taking a note of deposit/withdrawal methods, spreads and regulation are also essential. There are many brokers in Bitcoin trading South Africa that traders can choose from.