Some of us have had the term “Bitcoin” or “cryptocurrency”. Indeed, these are not ideas spawned from the mind of a science fiction writer. These are actually the newest form of digital currencies available on the marketplace. What exactly are these methods, why are they important concepts to keep in mind and what do you need to know before becoming involved? Let’s take a look at the basics before moving on.
Bitcoins and Cryptocurrencies Defined
So, what exactly is a Bitcoin? We can think of a Bitcoin more as a digital concept than a physical currency that you would hold in your pocket. Bitcoins are essentially digital “units” that are assigned a specific monetary value based upon algorithms. To simplify things a bit, we can think of them as being affected by supply and demand. The higher the demand for Bitcoins, the more their price will rise. Of course, the opposite is just as true. The key takeaway point is that anyone who holds Bitcoins can use them to make purchases much in the same way as would take place with a credit card or an electronic wire transfer. The main difference is that Bitcoins offer a higher level of security through anonymity.
Trading in Bitcoins and Cryptocurrencies
While some will use Bitcoins and similar digital currencies to purchase a product or service, it is becoming increasingly common to trade these assets much like a stock or a commodity. The main principle is simply. The currency will be purchased at a specific price. Once a cut-off point is reached, it is then sold for a profit.
However, there is another takeaway point to mention here. The price of cryptocurrencies are determined just as much by algorithms as they are by supply and demand. This makes them somewhat similar to Forex positions, as values can change rapidly; sometimes within an hour. This is the reason why the Bitcoin market is considered to be one of the most fluid in the world.
Bitcoin Trading Platforms
A growing number of online platforms are now catering to those who wish to trade in this currency. They offer a number of worthwhile assets such as technical analyses, live charting capabilities and the ability to interact with others via virtual forums. Some even believe that the Bitcoin may become a safe haven which can shore up one’s assets against a fluid currency marketplace. Some of the hallmarks of a reputable trading portal include:
- Superior levels of customer service.
- Live access to values with little lag time.
- A mobile-responsive design.
- The ability to access other underlying assets such as shares, commodities and CFDs.
Let’s also not fail to mention that while the Bitcoin is the most popular cryptocurrency, there are others on the market such as Ethereum, Ripple and LifeCoin. Each of these is associated with its very own marketplace although they are all governed by the same principles mentioned above. If you have been looking for a novel trading option, it is a good idea to research the concept of the Bitcoin in more detail.