Bitcoin is a digital currency that has been growing in popularity over the last few years. It’s also one of the most volatile currencies on the market, and it can be hard to trade with
Bitcoin because it swings so wildly. In this blog post, we will discuss:
-The pros and cons of trading bitcoin
-What you should know before investing in bitcoin
-Tips for understanding how to trade bitcoin
The pros of Bitcoin Trading
* Cheap and fast transactions
* No bureaucracy or borders
* Manageable volatility compared to other speculative markets like Forex.
* Ability to buy and sell fractions of a coin
* Ability to remain anonymous
* A decentralized currency not controlled by any government.
The cons of Bitcoin Trading
* Lack of regulatory oversight, which leaves you highly exposed to fraud.
* Potential for fraud and illegal activities due to the anonymous nature of the currency. (November 28, 2018).
* Possible stolen wallets and hacking breaches resulting in lost Bitcoins.
* Tax implications on all transactions that happen across borders, especially with the IRS cracking down on virtual currencies as a taxable asset rather than property like they used to treat them (see Virtual Currency Guidance).
* Cryptocurrencies still suffer from many unknowns such as scalability issues, centralization problems due to mining pools, etc.
There are also other risks involved when trading cryptocurrencies, including hackers trying to break into your account or steal your password or computer code which you use for logging into an exchange platform, along with several others listed.
* Risk that the currency will destabilize if demand falls or government regulation increases. Publicly listed companies on cryptocurrency exchanges are susceptible to business failure, hacks, and theft due to insufficient security measures in place.
In some cases, these entities have ceased operations after being hacked, while other exchanges have been discovered committing fraudulent activities such as embezzling customer funds with no legal repercussions from their home country governments.
This leaves investors even more vulnerable than they may realize when entrusting unregulated businesses with hundreds of thousands (or millions) worth of digital assets.
Finally, it is also important for retail investors to understand Bitcoin Loophole and that the cryptocurrency market is not immune from manipulation by bad actors. For example, Crypto markets are unregulated and may be susceptible to price-fixing at various exchanges, front-running orders through high-frequency trading (HFT).
What you should know before investing in bitcoin
For one, bitcoin is here to stay. It had gone through ups and downs since 2009 when it was invented by Satoshi Nakamoto (no one knows who he really is). Still, the growth of blockchain technology which underpins this cryptocurrency, means that even if its value were to crash at some point in the future, you could be sure it will exist for a long time.
Therefore, if you are looking at cryptocurrencies as an investment opportunity, then investing in bitcoins or any other currency would be a smart move. However, there are many things about Bitcoins that most people do not know before they invest in them. Some of these pros and cons may make you rethink your decision, especially if you plan on using Bitcoin for trading purposes instead of holding onto them with hopes that their price goes up.
Tips for understanding how to trade bitcoin
-Remember to do your own research.
-If you are not prepared to lose your money, then don’t invest in it.
-Cryptocurrency is a very volatile market and can be risky when traded for profit or any other reason that isn’t simply investing because of the passion behind cryptocurrency.
Always keep the money you are prepared to lose in mind before trading with any cryptocurrency. If it’s not something that can be afforded, it should not be traded for either.