Also referred to as Crypto, Cryptocurrencies are touted as the currency of the future. It is a digital currency created through a process called mining and does not involve a central authority such as a central bank, government, etc for its production or usage unlike fiat currency. They derive their name from the high security encryption methodology used to store them. Even though cryptocurrencies have been looked with scepticism by government authorities in the past, they have been gaining increasing acceptance day by day. Their decentralised nature makes them largely free from external influences such as political changes, rate fluctuations, etc thereby making them an attractive and alternative trading option.
Cryptocurrencies such as Bitcoin, Bitcoin cash, Ether, Litecoin and many more offer great benefits when used for the purpose of trading whether local or international. Sitting in any part of the world, you can create a trading account within a matter of few seconds and start trading securely from your home, office or even on a weekend outing trip. Crypto trading as they are popularly known offer you the following benefits:
1. All time trading
You can trade in cryptocurrencies twenty hours a day and seven days a week as no central authorities such as governments, regulators, etc are involved. Peer to peer trading makes it easier to execute trade at much faster speeds in comparison with traditional trading.
2. No intermediaries
The absence of intermediaries usually found in the traditional trading market puts you at ease with your wallet. You will surely find something interesting to buy or save for the future with that extra money you’ve saved.
3. Automated trade execution
Cryptocurrency trading is aided by software programs called ‘smart contracts’ which execute your trade once a certain condition is met thus making your work easier. Rest assured, you will find enough time to get your favourite cup of coffee or your favourite sandwich.
4. More Liquidity
Liquidity is a hallmark of cryptocurrency trading. The global, decentralised reach of cryptocurrency exchanges along with lesser fees grants you access to new markets and investors usually not covered by the traditional market exchanges.
5. More safety
Your transaction data is safe as no one can make changes to your data owing to the decentralised nature of the trading network.
6. Less capital exposure
You get access to the huge cryptocurrency market even if you make a small investment.
Frank Realises His Dreams
Frank, an executive at the local bank decides to trade in cryptocurrencies. He invests $1000 from his side and borrows $5000 from his good friend Emma. He buys 2 Bitcoins i.e. 2 BTC at a price of $3000 per Bitcoin. Frank now decides to sell both his Bitcoins at $4000 per Bitcoin. He gets $8000 from selling his Bitcoins, of which he pays back Emma $5000. Frank made a profit of $2000 on his trade. He doesn’t have to now spend from his salary on the application fee for his executive MBA program.
PS: Bitcoin is a popular form of cryptocurrency