Is Trading In Cryptocurrency the Same as Stocks?

Trading in cryptocurrencies carries substantial risk of loss. Past performance is not indicative of future results. Please consult your financial advisor before investing or trading in cryptocurrencies.

What is cryptocurrency?

Cryptocurrency is a digital currency that uses encryption techniques to regulate the generation of units and verify transfers, as well as to control the issue of new units. The best known cryptocurrency is bitcoin, which was created by an anonymous programmer, or group of programmers, under the name Satoshi Nakamoto and was released as open-source software in 2009. In mid-2010, one bitcoin was worth less than $0.01; its value has since increased tenfold and as of early 2018 stood at more than $17000.

A cryptocurrency is a digital currency created or obtained using cryptography or a completely decentralised virtual currency based on blockchain technology, such as Bitcoin, Ethereum, Litecoin and mexc. As opposed to regular currencies, a cryptocurrency is not controlled by any central authority and relies on peer-to-peer networks to verify balances and transactions.

Cryptocurrencies can be used to amass wealth because of the huge potential in their growth. Cryptocurrencies such as Bitcoin have the potential for appreciation in value by hundreds or thousands of percentage points. A person who invested $1000 in Bitcoin in 2011 would have $5 million today. This is one of the reasons why it can be attractive to hold cryptocurrencies, despite the risks involved.

This article is going to talk about the differences between trading in cryptocurrency and trading in stocks. 

What is crypto trading?

Trading in crypto refers to the act of buying or selling one particular cryptocurrency for another. You purchase a currency like Bitcoin by giving it money (or via an exchange) or sell it for another cryptocurrency like Ethereum or Litecoin.

As you can imagine, this is extremely risky as the price fluctuates with every deal. However, since the market is growing so fast,the price of coins like Poocoin is increasing and is giving a very good return to the investors. 

Exchanges and Brokers

The first thing you need to know about crypto trading is that there are a number of exchanges that users can use in order to buy and sell cryptocurrencies from one another. This is particularly significant since many people who have invested in crypto have been overwhelmed by finding suitable platforms to do so. Where should they look? Even though sites such as Coinbase have emerged recently, they’re still quite new and don’t cater for every type of cryptocurrency. The same situation applies to other, more traditional stock trading sites.

Another thing you need to know about this practice is that you can use exchanges or brokers, or you can use both. These types of platforms differ in a number of ways, and knowing which one is right for you could make all the difference when it comes to making money.

Let’s start by looking at what brokers are and how they operate. A broker is someone who buys cryptocurrency stocks on your behalf, then charges a commission (that’s how they make money). You don’t need to sign up with a broker, it’s strictly a business transaction.  Most brokers operate through a central exchange, meaning that they won’t be able to sell you certain currencies.

You can read more about crypto investment on platforms like Binocs. Binocs is a crypto management software which manages crypto assets like a broker does for you in traditional stocks investment.

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