Bitcoin is an innovative, digital currency that has changed the way people do business. It was created in 2009 by a programmer (or group of programmers) under the name Satoshi Nakamoto.
Bitcoin offers many advantages to traditional currencies, such as reduced transaction fees and faster processing times. This article will discuss what Bitcoin trading is, how it works, and some reasons why you should consider it for your own personal finances.
Bitcoin is a new way of conducting transactions, growing in popularity as an alternative payment method. We’re going to explain how it works and discuss its advantages and disadvantages.
To understand the process of trading bitcoins, we first need to understand some basic concepts about this digital currency. Therefore, this article will be split into two parts: Part one covers what bitcoin is; part two explains how you can trade them with other people on exchanges like Local Bitcoins or Bittrex. So let’s start from the beginning.
Table of Contents
What exactly are Bitcoins?
Bitcoin is a decentralized, virtual currency that operates using peer-to-peer technology.
In other words: no central authority issues new money or tracks transactions. For these tasks, the system uses complex mathematical algorithms which are transparent and open for all to see on its public ‘blockchain.’
This means anonymous people from across the globe can agree on what transaction occurred when there’s a disagreement. It also takes away banks’ power to control transfers, receive fees, and act as an intermediary if something goes wrong with your payment – since bitcoin does not require one!
In fact, mining bitcoins (solving those math problems) grants you this very privilege by putting more computers onto the network, thus improving it. So far, over 100 000 merchants around the world accept bitcoin as a form of payment.
If you decide on buying some bitcoin, your best chance of success is sticking to reputable exchanges like Bitcoin Pro, which offer advanced trading features such as margin trading, stop-loss orders, lending markets, etc.
Another way of becoming an active trader would be joining one of many available online trading courses – but make sure you pick only reliable ones! The first question that may come to mind is: How do I get bitcoins?
There are three main ways of obtaining this cryptocurrency: mining, buying, or trading for them. Mining means solving complex mathematical problems with sophisticated computer software, which then releases blocks (a certain amount) of coins into your account once it’s done.
It has become more difficult nowadays since there’s so much competition on the network – but if you want to try, you can join one of the various available pools out there and receive smaller pieces accordingly! Buying bitcoins used to be very easy back in 2009 when they were worth pennies only.
Today, however, most exchanges ask for complete KYC verification though some don’t even go overboard by demanding a copy of your credit card. This is understandable since they want to prevent fraud and stay on the right side of regulators by keeping all transactions traceable.
Trading bitcoins for profit
So you have some bitcoins but would like to trade them? The process might seem daunting at first glance, especially when there’s so much information online about it, but don’t worry – we’ll explain how it works in simple terms! First, you need to decide what kind of trader (long or short term) you will be any of these.
A long-term bitcoin investor plans their purchase over an extended period to predict price fluctuations; He buys large amounts hoping that his assets will gain value over time. Such buy and hold strategy lets him sell off small pieces at a time and gradually acquire profit.
The Bottom Line
On the flip side, short-term traders buy bitcoins with the intent to resell them shortly after for a profit. Therefore, they follow market news closely and aim to close their positions as soon as they feel the price has peaked so that they can secure profits before it drops again.