What is Bitcoin Trading?
Bitcoin is not more than the collection of ropes in the form of computer codes. Bitcoin is a cryptocurrency (digital or virtual currency) created by Satoshi Nakamoto in year 2009. Satoshi became disappear after creating the Bitcoin and his identity is still a mystery. Priory Bitcoin offered an ease to send money in the form of btc. But now Bitcoins trading has become a versatile trading platform. No one owns Bitcoin and even it is not issued or backed by banks and governments that is why Bitcoin is a decentralized virtual currency.
Some of us wants to know that the bitcoins trading is safe to invest and many of us have trust issues related to bitcoin investment.
Here I have discussed 5 curious facts that everybody needs to be aware of before investing in bitcoins trading
1. How Bitcoin Works?
Traditional currency goes through a central payment processor like your credit card company. But Bitcoin transaction whether you buy goods or sending money to your friend processed by a large number of computer network system running on special software. When someone sends Bitcoin to his friend a large computation power computer network system check and verify that the btc that you send to your friend is not forged by a digital signature and you have the private key of sending Bitcoin and some other details.
Bitcoin uses Blockchain technology. Blockchain means a public ledger which contains all the transaction details of a specific Bitcoin form it’s 1st to recent transaction history. Bitcoin miners uses a large powerful computer system via a specific software to add these transactions into the public ladder, and in return rewarded by Bitcoin. They got a new Bitcoin generated 1st time in the system. So, if you listen Bitcoin miner it means they generate new Bitcoin by solving complex math problems. It’s basically the first practical step in bitcoins trading.
2. Highly Volatile Currency
The volatility of Bitcoins trading is very high, it fluctuates 30% of its original price in hours or even in minutes. In 2017 the btc price risen up to 300 times and its peak value which was 20,000$. The reason for volatility of Bitcoin is that the majority of the people use it only as an investment or trading purposes. Only a couple of websites allows the Bitcoin payment method. So the Bitcoin price and sell cycle is so volatile. That is why Bitcoin is highly risked but profit based investment.
In traditional market, volatility index available to check the currency volatility. Good news for Bitcoin user s is that volatility index of Bitcoin has become also available in the market named as Bitcoin Volatility Index.
3. Don’t Invest on Emotions, invest on Financials
This one is only a General Investing Advice not only for Bitcoin. Please don’t invest on emotions in any business. I think the most common argument for investing in Bitcoins trading is that the people who invest a 100$ in 2010, became a millionaire today that is why, people think this is a highly profitable business. Actually that’s already happened in the past and not likely to happen in present. This is emotional argument not financial argument. You can’t predict the future value of something by its past value or its performance. So before buying a Bitcoin remember that you are in 2020 not in 2010 dude. Nobody can predict that the Bitcoin is going to moon or come back and crash to earth. And because Bitcoin is new and extremely volatile it can go up in seconds or come back and go down so promptly.
4. Nobody Owns Bitcoin
As discussed above Bitcoin is decentralized worldwide virtual currency meaning that it is not controlled, exchanged or regulated by any government or any private entities even not controlled by big banks like World Bank etc…
This is good news for some people because these private or government authorities would not be able to manipulate the value of Bitcoin. But at the same time there is bad news for some people because these organizations do not want to lose their power. So they can do the lot to block the use of btc, and we have seen this in different countries. A lot of places do not accept the btc yet and this is a big problem for bitcoins trading in these countries. But if the online shopping sites like AMAZON in future uses the Bitcoin as payment method then the whole game will change.
5. Don’t Get Greedy
Yes again we all know how people have become millionaires from Bitcoins trading but as I had discussed above don’t get greedy because you can’t predict the future value of Bitcoin by its past performance. If you reach that profit level than you have already decided it’s ok be happy and sell it again but don’t show greediness. This digital currency doesn’t take much time to go down.
A Little Piece Of Advice
People should also be aware of how Bitcoin fluctuates. The price of Bitcoin depends on the supply and demand method. If more and more people around the world hear about the Bitcoins trading than with all of this international publicity a huge influx of buyers increases the demand and price of Bitcoin goes up. On the other hand if the seller influx increases then price go down.
At the end of 2017, china made a statement that they are going to try and ban Bitcoin and this news sent the Bitcoin price at 3500$ and about after a month and half the Bitcoin shot up to 7500$. This news shows that how much Bitcoin currency can be volatile.
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