Cryptocurrency trading just as any other type of trading implies buying of the stock, and holding on to it until it appreciates. For cryptocurrency trading, though, digital assets are used, so there is no physical stock just like there is no physical cryptocurrency. Despite these similarities, stocks are not the same as cryptocurrencies.
Below we will find out the main differences between virtual currency trading and the regular one.
First of all, a digital currency exchange is not part of the regular stock exchange. To trade on virtual currency exchanges, one may use an exchange/broker Coinbase as well as the related GDAX. These are in principle similar to Wall Street but with different specifics and entities. For instance, cryptocurrency market works 24 hours per day while the stock exchange market does not.
Secondly, in crypto trading, it is much harder to make any predictions as to rising and fall of a cryptocurrency, unlike other exchange markets. There is no reason for the price to be volatile except fear and greed, not to mention government intervention. This may be both good and bad as it is possible to make a fortune in a moment and lose it in the next one. This relates also to such digital currencies like Bitcoin or the GBTC Bitcoin. One should, therefore, take into consideration ways to mitigate these risks or hedge them appropriately.
Basic Must-Knows for Crypto Trading
There are only a few more things to become aware of before starting trading digital assets beyond what was noted above. So here they are:
- a place to trade: a beginner might prefer to trade digital currency stocks on the stock market. The main Bitcoin stock here in 2018 is GBTC.
- places to buy cryptocurrency: the simplest place to buy, sell, and store coins is Coinbase, but you can only buy, sell, and store Bitcoin, Ethereum, Litecoin, and Bitcoin Cash on Coinbase. There are also the following exchanges like Coinbase’s GDAX, Bittrex, Binance, or Kraken.
- the riskiness of trading: to avoid risk, it is better to trade only the top coins by market cap, or GBTC. Other cryptocurrencies are riskier.
Apart from trading cryptocurrencies, one may also use digital currencies for transactions and break out a graphics processing unit, as well as mine these coins. These being also an interesting option, you still need to be set up for trading even if engaged in other possible operations with digital assets. To this end, the following tips shall stand you in good stead.