• Skip to primary navigation
  • Skip to main content
  • Skip to footer
WittySparks Logo White

WittySparks

Ignite Your Thoughts

  • Topics
  • Reviews
  • Subscribe
WittySparks / Finance / Cryptocurrency Trading – How Does It Work
Cryptocurrency - The Digital Currency

Cryptocurrency Trading – How Does It Work

Finance August 20, 2018 by Nishitha

Cryptocurrencies have become precious assets since 2010 with an ecosystem of their own for trading. With over 1500 currencies, there have been new strides in the cryptocurrency trading mechanisms adopted from traditional stock trading.

It is popular due to ease of investment and room for new currencies to be launched and grow. The speculation has given huge returns past 2017, making Bitcoin probably the most popular asset class by returns.

On this page

  • What are Cryptocurrencies and How to Trade Cryptocurrency
  • How does it work?
  • Why should you look at cryptocurrency trading?
  • Various Cryptocurrency Trading Platforms

What are Cryptocurrencies and How to Trade Cryptocurrency

Cryptocurrencies are digital assets that were invented as a new-age medium of exchange. They use cryptography, i.e., a coding mechanism involving encryption and solving mathematical algorithms that are key aspects of blockchain technology. The creation and recording of each unit are decentralized with a public address on the network.

How does it work?

Issuing companies are fintech companies with a product/service they want to finance or bring in use by the tokens issued in lieu of each service provided to the token buyers. These are called Utility Tokens, which are the most common type of cryptocurrencies being issued today.

The currencies are created by a network of peers, also known as miners, who are computer geeks who generate these currencies by solving the “proof of work” or cryptographic puzzles. In crypto mining, various cryptocurrency-related transactions are verified and added to the blockchain ledger that records financial transactions.

The confirmation, recording, and counting of each unit happens on this network, which avoids double counting. Thus, each currency can safely be taken to be unique. One important aspect of crypto mining is that transactions cannot be reversed or tampered with.

Why should you look at cryptocurrency trading?

Bitcoin’s price had increased from $1, when it was first introduced in 2009, to an all-time high of $19,783 in 2017!! Anyone who would have invested in the initial coins on a lark would not have to worry for generations to work! Following this success, many other coins, such as Ethereum, which have many uses in software applications, have given about 10,000% return since inception.

Many other currencies apart from Bitcoin (called Altcoins), have given tremendous returns. While these can be the pros of cryptocurrency trading, the cons can be high volatility and transparency in various new coins coming into the market.

Various Cryptocurrency Trading Platforms

Trading cryptocurrencies can be highly profitable, along with being volatile. The key to success is to use a trusted cryptocurrency exchange platform or cryptocurrency broker. There are many cryptocurrency trading software available for digital currency trading online and many exchanges that provide insightful broker reviews, technical charts, price information, low brokerage, above a certain limit of trading on various cryptocurrencies.

Using a bank account or credit/debit card, one can fill up the wallet and buy and sell anytime. Exchanges also keep user authentication highly secure with 2F-methods to avoid incorrect logins.

If you are wary of trading in cryptocurrencies directly, you can also invest in trusts like Bitcoin Investment Trust (GBTC), which owns Bitcoin and other altcoins that it regularly trades to multiply returns.

There are various sites that will give you step-by-step tutorials on how to open an account and wallet and trade cryptocurrency. Also, there are various traditional brokerage firms that allow you to open a demo account and help you get a feel of the goods involved in digital currency trading.

You can always check the broker service reviews on websites like Regulatedbrokers.com before trading. Many of the brokers listed on this website offer cryptocurrency market trading, and it will be good to make a comparison.

Cryptocurrency trading is becoming sophisticated with various technical signals since it has been around for almost a decade. Many research analysts have started moving towards the financial analysis of returns and intrinsic value of many fintech companies issuing these tokens through an Initial Coin Offering (ICO). Trading also entails understanding the Tax implications in your country and how to records, report, and present them in your annual filings.

Conclusion

Cryptocurrencies are here to stay, and traditional money managers must learn the nuances of cryptocurrency trading sooner or later. While central banks might take time to warm up to the idea of using cryptocurrencies as a parallel for payment to fiat, cryptocurrency trading sites will ensure people have enough to create their alpha on.

Appreciate your opinion on this topic on social media by tagging us @wittysparks
  • LinkedIn
  • Twitter
  • Like
  • Pinterest

Related Topics

  • What is DeFi in crypto? How it works and its future in 2022?
  • Keeping Your Cryptocurrency Safe and Sound
  • Things you need to know about cryptocurrency wallets
Launch Offer
Rocket.net - Managed WordPress hosting
Rocket.net - Managed WordPress hosting
$1 for first month, $25/month

A highly secured WordPress hosting platform powered by Cloudflare enterprises with customized services for agencies, eCommerce, and small businesses.

  • PageSpeed Guarantee
  • Ultra Secure Platform
  • FREE Migrations
  • Automatic Updates
Try for $1.00 Our Review
We earn a commission if you make a purchase, at no additional cost to you.

Our Favorite Tools

Semrush - SEO and Marketing Tools
Semrush - SEO and Marketing Tools
$119.95/mo
Try for FREE Our Review
Semrush - SEO and Marketing Tools
Lasso - All-in-one Affiliate Marketing Plugin for WordPress
$29/month
Start Free Trial Our Review
Semrush - SEO and Marketing Tools
Grammarly - AI-powered writing assistant
$12.00 / month
Try for FREE Our Review
Previous Post: « White Label SEO Reseller Program Creates Smoother Shift from Traditional to Digital Marketing Services
Next Post: How Can Call Center Software Enhance Customer Experience »
Profile picture for Nishitha

About Nishitha

Co-founder of WittySparks
WittySparks Staff

I am done with my Physiotherapy Graduation. And I always try to share Health and technology tips with people. Apart from Physiotherapy and being a tech savvy, I do explore more on Technology side and I keep sharing my findings with wider audience.

View all posts by Nishitha
  • LinkedIN
  • Twitter

Footer

Search

Exclusive Coupons

  • Moqups Review - Use coupon code “WITTYSPARKS" for 20% off or "PARTNERS50" for 50% discount on all plans.
  • Serpstat Review - Use coupon code "wittysparks_discount" for 30% off.
  • WPForms Review - Use coupon code "WITTYSPARKS" for 50% off.
  • WPPayForm Review - Use coupon code "wittysparks" for 10% to 40% off.

Affiliate Disclosure

If you make a purchase from WittySparks links, we will receive a small commission. See our Affiliate Disclosure.

Sponsors

Partnered with FreePik to use the licensed images.

turn to dhgate for smartphone

Follow Us

  • Facebook
  • Twitter
  • Pinterest
  • LinkedIn
  • Instagram
  • YouTube
  • RSS

Copyright © 2022 · Hosting sponsored by Rocket.net (Affiliate link)

  • About Us
  • Contact Us
  • Privacy Policy
  • Affiliate Disclosure