The word ‘cryptocurrency’ is relatively new. It has been doing the rounds since a few years. Cryptocurrency is a form of secure digital currency which came into existence when a Japanese man by the pseudo name Sakoshi Nakamoto produced the first cryptocurrency called Bitcoin in 2009 through a process called mining. Ever since then, mining and trading of cryptocurrencies has increased globally. As more and more traders get into trading of cryptocurrencies, it’s popularity keeps on rising.
Why is cryptocurrency trading very relevant today?
Cryptocurrencies are traded through a decentralised network with the help of private exchanges dedicated exclusively to them. Many new cryptocurrency exchanges are opened every year to take advantage of their benefits which are as follows:
- Decentralised network: A network free from the control of a central authority ensures efficient operation. Hence, you can transfer ownership of your cryptocurrency or vice versa within a matter of seconds.
- Security and automation: Both security and automation are unique to cryptocurrency trading. Your trades are executed automatically using special software called contracts subject to certain conditions being fulfilled. Your data is only visible to you and the trader on the other end thus keeping you free of worries about the time spent and safety of your transaction.
- Capital access: You get access to many markets which are not accessible in a conventional system, thus getting exposure to more capital. People who had been restricted in their market trading activities now can put their capital to good use and make profits.
- Trade availability: Cryptocurrency trading gives you the opportunity to trade all time i.e. twenty fours a day and seven days a week. So, you need not worry anymore that you missed out on a day’s trade owing to any commitments be it personal, professional, etc. You can trade even during your holidays if you get some free time in between.
- Cryptocurrency varieties: You are spoilt for choice when trading in cryptocurrencies. There are around 2000 cryptocurrencies available though you will not find them all at one place to trade in. Bitcoin is the most valuable and popular one available. Other well-known cryptocurrencies are Ether, Litecoin, Bitcoin cash, USD cash, Monero, etc.
- Absence of intermediaries: Cryptocurrency trading networks do not involve intermediaries. Hence, it saves your time and money. Lesser trading fees further makes it more viable to invest in crypto trades.
Miguel makes a profit
Miguel had started trading in cryptocurrencies recently. He had five Ethereums, a popular cryptocurrency to sell. Fearing a loss in value of Ethereum, Miguel sells them at a price of $100 per Ethereum, thus earning $500. A few minutes after he sells, the Ethereum value goes down to $88. Miguel now sees an opportunity and buys back five Ethereums for $440 i.e. $88 per Ethereum. Therefore, the total profit earned is now $300 i.e. (60×5)
PS: Selling five units is equal to selling five ether tokens, so Miguel gained $5 for a $1 loss in value of Ethereum.