In these times, you cannot talk about finance and not mention cryptocurrencies. All over the world, when we talk about moves like cryptocurrencies and trading destinations, traders buy or sell into some kind of cash or convert their cryptocurrencies into cash. The four leaders in the cryptocurrency world are Bitcoin(BTC), Etherum(ETH), Litecoin(LTC), and Dashcoin(DSH), and the upcoming star Dogecoin(DOGE) among others. The major standards for virtual money and cryptocurrencies are still in their early stages, so we are yet to reach their full potential. As an introduction to the “Building Wealth With Investment Series1”, in this article, we have highlighted nine benefits of cryptocurrency trading.
What is Cryptocurrency?
Cryptocurrency (or “crypto”) is a digital currency that can be used to purchase goods and services but uses a global or universal online ledger to secure online transactions with strong cryptography. The biggest reason to consider these unregulated currencies is to trade for gain, as they sometimes raise prices dramatically.
Cryptocurrency is primarily a mode of payment that can be used for the exchange of goods online. Cryptocurrencies work using a technology called the blockchain. Blockchain is a decentralized technology with multiple computers that manage and record transactions.
What is Cryptocurrency Trading?
This describes the exchange of cryptocurrencies through the exchange of your crypto trading accounts. It also includes speculating on crypto prices before buying the crypto.
Behind the small loop is a crucial success. Do you want to know the secret? It’s just a matter of carefully following the price values. Even if it falls short, you buy new crypto. If it also goes higher – you have to exchange your crypto and simply take profits.
Experienced traders can predict whether the price of an active cryptocurrency will rise or fall. And they don’t have to own that asset. Through a contract for differences (CFDs), they can spread bets, scalping, position trading, range trading, swing trading, and intra-day trading. This is explained in further details in My upcoming book ‘‘Building Wealth Trading Cryptocurrency.’’
Benefits Of Cryptocurrency Trading
- Cryptocurrencies work 24 hours a day
The cryptocurrency market is open to trading 24 hours a day as it is not centralized or controlled by any government. Individuals can do business at any time. This is very useful because it allows you to negotiate your schedule whenever you want.
When it comes to transferring money, transparency is an important thing. Blockchain technology makes it possible to keep transactions visible but keep personal information hidden. Therefore, your wallet is visible, but not your data. It also improves the security of using cryptocurrency as the protocol cannot be manipulated by anyone, be it a person, an organization, or a government.
Security is essential when it comes to investing money. Bitcoin users can keep their transactions under control by keeping bitcoins in a digital wallet. In addition, sellers can no longer charge customers anything that goes unnoticed. They would have to talk to the customer before adding extra charges. In addition, identity theft is impossible because personal information is not required at the time of the transaction.
- Cryptocurrencies Are Volatile
Existing cryptocurrencies have been volatile due to a number of factors in their short history. The last time bitcoin fell very low was because of the coronavirus. In a highly volatile trade, bitcoin fell around $3,850 in overnight trading. Also, according to public information on CNBC’s website2, the price of bitcoin broke more than $5,000 in July 2017 and then reached nearly $20,000 in December 2020. The recent highs went all the way up to $60,275 in March 2021 to back down to around $42,395 in September 2021.
BUILDING WEALTH WITH INVESTMENT SERIES
Reviewing the charts Fig.1 shows a high level of volatility in the Crypto market. In fact, it is the volatility that makes the cryptocurrency market so exciting and rewarding. Because of that level of volatility, traders have created some computer codes to monitor the volatility and take actions for them around the clock. These programs are called trading bots. Trading bots have become more popular among traders as they can monitor the trade at any time and take advantage of market imbalance or variations.
- Long-term and daily trading
Another exciting aspect of cryptocurrency is that there are two options when trading: Cryptocurrency Long Term Holding and Day Trading. In the long run, an investor decides to hold the coin or token for a long time, assuming it will be worth more in the future. Coins are usually kept for at least a year.
On the other hand, in day trading, a trader tries to take advantage of the price fluctuations that usually occur in a day.
Both methods are great options for anyone looking to get involved in the world of cryptocurrency trading. However, for novice traders, it will be easier with longer-term positions.
- Accessible and fast
In the case of a direct transfer between two parties, because there is no intermediary in the transfer thanks to peer-to-peer commerce, the digital transfer of ownership takes place within seconds and gets confirmation within minutes. Since there is no central government in the market, parties anywhere in the world can trade directly with each other.
Billions of people around the world use the internet and access it via smartphones. Therefore, it opens up the opportunity for all these people to enter the cryptocurrency market. It is also an excellent opportunity for people from less developed countries who do not have any access to financial infrastructure. They get to have a chance, thanks to cryptocurrency wallets and exchanges.
- Low trade costs
One of the main reasons people go for cryptocurrency or crypto is that transactions are cheaper than traditional bank payments, especially for high-value transactions. In this case, companies and investors do support not only lower transaction costs but also short-term traders using brokers that offer CFDs in bitcoin or another cryptocurrency.
- Better liquidity
Liquidity is a crucial element when it comes to trading marketable assets, and this also applies to cryptocurrencies. Liquid markets offer a more efficient, more profound, and smoother trading experience. Illiquid markets can put traders in difficult situations to exit and cause massive losses. Although it is believed that forex is the most popular market at the moment, cryptocurrencies also cannot be put on the sideline because they are inherently liquid.
- Tax-efficient trading
Keeping very accurate records is the most crucial element in implementing a tremendous tax-effective cryptocurrency trading strategy. Regardless of how the cryptocurrency investor or trader earns through trading, long-term investment, or other means, accurate accounting is essential because it allows for accurate valuations. Cryptocurrencies have many tax advantages. For example, spread bets are not fully taxed. There is no capital gains tax (CGT) on the spread bets because you are never the owner of the property. Talk to your CPA or financial advisor for tax strategies.
If you happen to be thinking about cryptocurrency trade, it is advisable to go on with it. It is one of the best ways to build wealth through investments, and you can barely find any other trading method as rewarding as or better than cryptocurrency trading. My upcoming book ‘‘Building Wealth Trading Cryptocurrency’’ will take you on a journey in the amazing world of cryptocurrency trading.
The author is a Cybersecurity Engineer with 27 years of experience in engineering and over 13 years as a professional trader. The author is a seasoned actor actively trading various financial instruments and markets, and a financial advisor helping families to build wealth.