Why should I trade with bitcoins?
The potential of bitcoin trading is a trail of endless opportunities. Since the first bitcoin was launched in circulation in 2009, various other brands and stock brokers have come to see the value of using this digital currency. Today, there are around 700 companies offering bitcoins and an estimated 16.78 million bitcoins in circulation worldwide (approximately $239 million in USD).
Aside from its lucrative success in recent years, here are a few more reasons to start trading with bitcoins:
- Convenience – With bitcoins, you can send and receive money to and from anywhere. As a global and uninterruptible currency operating via the internet, secure fund transfers and transactions can easily be done. What’s more is that bitcoins don’t require excessive fund transfer fees that banks usually charge you.
- Security – One of the things that made Bitcoin such a successful endeavor is how it is designed to be un-hackable. Bitcoins are encrypted in the most sophisticated way in order to protect the integrity of the currency. In fact, since the invention of Bitcoin, it has operated without any major disruption including hacks.
- Free from government influence – One of the major advantages of bitcoin trading is that its valuation can never be influenced by local economic issues such as inflation and interest rates. Furthermore, its nature as a global web currency makes it immune from geopolitical pressure from nations vying for economic dominance.
- Low deposit needed – Bitcoin trading is quite accessible. You can start trading with as little as $25 and trade it with bitcoin-accepting forex firms. Some firms even offer promos with higher currency to bitcoin exchange rates. Plus, because it is an emerging forex trend, brokerage costs are being kept very low in order to attract more investors to trade with bitcoin.
- Lucrative potential – Much like regular currencies, the bitcoin forex value also fluctuates based on supply and demand. The bitcoin system is also designed to implement a cap to the number of crypto coins circulating over the web making it a competitive and highly valued currency. Various investors have seen lucrative profits from trading bitcoins especially with double wins from forex and bitcoin exchange profits.
How to get started
Now that you have one or more reasons to start trading with bitcoin, here’s a guide to help you stop asking and actually start investing.
Step 1: Get a Bitcoin Wallet.The first step for anyone wanting to get started on bitcoin trading is to get their own bitcoin wallet. Bitcoin wallet allows users access to a bitcoin account. The wallet comes as a software application which can be downloaded via mobile, desktop, or through the internet. Bitcoin wallet applications also have its own advantages and drawbacks so make sure to do your own research before choosing the right one for you.
Step 2: Buy! Buy! Buy! Now with your own wallet, you can start purchasing bitcoins. Bitcoin purchases can be done in a number of ways such as 1) accepting bitcoin as payment for services, 2) getting bitcoins from a friend, and 3) purchasing bitcoins from bitcoin-accepting forex firms. The most secure way however, is to purchase bitcoins directly from stock exchange firms. Just make sure not to buy from third party sources that are most often unregulated.
Step 3: Register for a Forex trading account.Before you start investing, you should first register for your own forex trading account with any bitcoin-accepting broker at the stock market. After completing the requirements and setting up your account, you can now start choosing which currencies to invest in.
Step 4: Start to invest.Like any type of money, you should always be careful in handling bitcoins. At the same time, bitcoin trading is still a form of investment and investments always come with their own risks. While bitcoin has enormous potential especially with the occasional increase in its value, you may want to consider taking a few online courses in order to better understand the inner workings of the foreign exchange market.
Step 5: Spend your money wisely.After a few successes in bitcoin trading, try taking a pause and think about how to spend your money wisely. Re-invest in the stock market with your newly acquired bitcoins and live the life you’ve always wanted!
How to trade at Forex using Bitcoins
Forget your financial theories 101 class for a second, and bear with this brief explanation about the bitcoin.
The volatility of the bitcoin
Unlike any other currency in existence, the bitcoin has a highly speculative nature that defies the traditional laws of finance.
For instance, while it is apparently immune from the effects of inflation and other macroeconomic phenomena, it is highly vulnerably to unexpected news items. When China announced a total ban of bitcoin exchanges, the value of the bitcoin fell by 9.3 points. The same happened when Russia prohibited cryptocurrency exchange leading to the bitcoin value plummeting to -12.5 percent. On another instance, an announcement from a major corporation that it will soon take on bitcoin-based projects boosted bitcoin values up to 3.8 percent.
On a daily basis, the value of the bitcoin fluctuates between 5-10 percent which is a very attractive feature that lures in the riskiest and most adventurous traders. Indeed, even when the chances of raking in massive profits are imminent, so are the massive losses.
The basics of forex trading
For beginners, you first have to familiarize yourself with the basics of forex trading. Foreign exchange trading works by depositing a certain amount of money to a specific currency. You gain profit when the value of that currency increases relative to the currency you originally used as capital.
For example, imagine you are a trader who deposited 50 USD on the British pound. With an estimated exchange rate of $1 equals to £0.5, you will receive £25 if you withdraw your deposit without the currency value changing. But say, the currency value of the British pound doubles to $1 equals £1, then you will receive 100 USD, and a 100% profit from your initial $50 deposit.
Now, with bitcoins, it becomes a little bit more complicated. In addition to the potential profits you can make via a regular currency exchange, you can also exploit value fluctuations between the bitcoin and USD or any strong currency in the market.
For instance, let’s assume that a single bitcoin is equivalent to 500 USD, and you wish to bet on the British pounds with an exchange rate of £0.5 = $1. If the value of the British pound relative to the US dollar increases by 100%, then you will get double the amount of money from 500 to 1000 USD.
Once you have this money in USD currency, you can wait until the bitcoin to USD exchange ratio increases thereby giving you two whole opportunities to profit by exploiting price fluctuations in the forex market.
In essence, the very volatility of the bitcoin amplified by currency fluctuations is what makes bitcoin trading a lucrative business. And while the multiple levels of exchange rate transactions via bitcoin can be a bit confusing at first, but with some practice, you can be an expert bitcoin-trading forex broker in no time.