Do you want to Trade Bitcoin? Let's get started learning how to trade bitcoin!
Bitcoin trading is actually pretty straightforward once you get the hang of it. Being the premier Cryptocurrency, it is pretty straightforward to buy and sell them as and when you want to. Bitcoin has a history of volatility which has brought in a lot of traders and media interest into the ecosystem.
How to Trade Bitcoin: Quick Start Guide
Every time Bitcoin’s price rises, new investors and speculators want their share of profits. It is extremely easy for anyone to trade Bitcoin as the barrier for entry is so low. So, how do you get your slice of the pie? What do you have to do to make sure that you are going to trade bitcoin in an efficient manner?
Well, this guide will help you make your trading decisions. So, before you get into the “how” let’s start with the “why.”
Why Should You Trade Bitcoin?
The reason why you should invest in Bitcoin, and cryptocurrencies in general, is because there is nothing quite like it. There are several features that makes Bitcoin trading both exciting and unique.
Bitcoin is Not Fiat
Bitcoin isn’t fiat currency, i.e., it is not under the control of one single government. So, instead of one single economy having a stranglehold over the price of the asset, Bitcoin’s price has reacted to a wide range of events.
Let’s look at some events over the last few years which has affected the price of Bitcoin.
#1 Brexit
UK’s decision to opt out of the European Union has caused quite a scene with their local economy. As a result of this, exchange giants Binance had stated that they have been “overwhelmed” by registrations for its new Jersey-based trading platform because of insane demand. Binance Jersey allows users to trade euros and British pounds with bitcoin and ethereum and access digital asset management services.
#2 India’s Demonetization
Demonetization was a move by Indian Prime Minister Narendra Modi which made the Rs. 500 and Rs. 1000 notes non-legal tender. Just 18 days after the demonetization declaration, Bitcoin’s price on Zebpay, one of India’s leading exchanges, went up from $757 to $1,020 (per bitcoin). Back then, BTC was trending for $770 in the US.
#3 Trump’s Election
Immediately after Trump’s victory, the markets started falling. Dow Jones, S&P 500 and Nasdaq were all plummeting. Quite similarly, Australian markets lost USD 30 billion. However, Bitcoin was a whole different story. Just before the election night, it went up to $740 due to problems encountered by the Mexican peso. After that, it went down to $705 and then went to $739 as soon as Trump got elected.
From all these three cases, we can make one simple and obvious conclusion. People have a tendency to invest in Bitcoin when faced with unstable markets and obstacles confronting fiat currencies
Bitcoin is open 24/7
Unlike stock markets, Bitcoin is open 24X7. The reason being stock markets are specific to the country they operate in and usually reflect the working hours of that country. Anyone can purchase bitcoin on most of the exchanges. There are hundreds of exchanges around the world that operate 24/7. Meaning you can trade bitcoin 24/7!
Bitcoin is Volatile
Bitcoin and cryptocurrencies, in general, are infamous for its rapid and frequent price movements. This volatility can help traders make an easy, quick buck.
How does Bitcoin work?
Before you invest in an asset, you should at least know how it works. We have covered the mechanics behind the cryptocurrency several times here in detail. However, for the uninitiated, we will give a brief overview. If you are already aware of the mechanics, then please skip to the next section.
Blockchain Technology
Bitcoin was created by an unknown programmer who goes by the pseudonym “Satoshi Nakamoto.” Bitcoin is powered by Blockchain technology.
The Blockchain is a time-stamped series of an immutable record of data that is managed by a cluster of computers not owned by any single entity. Each of these blocks of data (i.e. block) is secured and bound to each other using cryptographic principles (i.e. chain). OK, so what does that mean in simple terms?
Imagine a universal ledger that anyone can download and write into. Anybody who has a copy of that ledger can:
Check the records that have been logged into the ledger.
Check the time at which those records were logged.
Cannot tamper with any of the previously made entries because the ledger is immutable. This property of “immutability” is one of the most important features of the Blockchain and it gains it through cryptographic hash functions.
That is what Bitcoin gave to us, the first proper implementation of a technology that can act as an immutable and transparent ledger. This innovation gives us a system that is completely incorruptible and free from human corruption since each and every transaction made into the Blockchain can be checked.
How Do Transactions Work?
One of the most valuable things about Bitcoin is that you don’t need to go through a bank to send a transaction. As the community likes to say “you are your own bank.” So, how do they manage to do that? Through public key cryptography.
Every Bitcoin user has a private key and a public address that are both mathematically derived from each other. So, how does it work? It is actually pretty straightforward. The public address is like your account number and the private key is like your PIN code When you receive Bitcoins, people will send it to your public address. You can then send your Bitcoins to anyone via your private key.
So, going by that explanation, we can make two observations:
You should reveal your public address to everyone.
You should never tell your private key to anyone.
It really is as simple as that.
This should give you a brief idea of what Bitcoin is and how it works. This is the reason why Bitcoin has become such a big deal. Now, let’s look into how we can get your hands on some, the first step to learning how to trade bitcoin!
