Bitcoin is the world’s first form of entirely digital money. The growing value of bitcoin has attracted a significant level of media interest and, consequently, there are few participants in the forex markets who remain completely unaware of cryptocurrencies to some degree.
However, the actual technology behind digital money is given less coverage, and even experienced forex traders may remain unsure about the risks and rewards associated with this area of the money markets. Fewer still have a firm grasp on the practicalities of managing a cryptocurrency position: how to buy and sell digital cash; where to store money; and how to protect it in a secure and risk-free environment.
This guide will introduce cryptocurrency newcomers to the fundamentals of Bitcoin trading, highlighting its similarities – and its differences – to other forms of forex trading.
The first essential step when entering the cryptocurrency market is to create a location for your digital currency to be stored. The two most viable options are either a wallet or an account on a Bitcoin exchange.
An exchange account is similar to a Bitcoin banking account. Here, your cryptocurrency is deposited with a private business which operates the trading platform. This is the primary advantage of an exchange account: your bitcoins are instantly available, should you wish to sell them, or buy more, on the exchange. For this reason, virtually every trader who speculates on Bitcoin price movements on a regular basis will hold at least some of their cryptocurrency on an exchange.
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