Buying, selling and trading Bitcoin – What are the options?

Many of the readers here will already be aware of what Bitcoin is.

This new currency has certainly had a lot of media attention recently due to the rapid price increases it’s witnessed. For those who are not yet familiar with the concept of it, it is a digital currency with no psychical state, with which you can send money across the world almost instantly, through a peer-to-peer network that removes third-party involvement.

Also worth mentioning is that all transactions are registered onto a continuously growing public ledger called blockchain.

There is a limited number of Bitcoins available, which means it can’t be diluted at will. There also is no single institution that controls it, which means complete freedom from governments and countries. The currency has had a volatile life so far rapidly increasing and decreasing in value fuelled by the speculation around its potential.

When buying or selling cryptocurrencies, being aware of the potential risks as well as the rewards is essential.

Where can you trade Bitcoin?

There are two main options for trading the cryptocurrency which is either through a cryptocurrency exchange or an online broker (a forex broker would be a good example). There are a number of differences between the two options which are important to know when deciding where to trade Bitcoin. When you purchase on a cryptocurrency exchange you actually own the coins whereas with an online broker you trade a Bitcoin CFD.

If you are looking for the simplest and most secure way to trade, it seems that CFDs would be the more advantageous option. However, with them, you are not able to use it to buy products or services. A Bitcoin CFD is for speculation/investment purposes only.

Contracts for difference, also-known-as CFDs, grant you the possibility of gaining exposure to Bitcoin price volatility without having to actually purchase cryptocurrency. Not needing to think about how to secure an e-wallet, back-up, stay safe and so on allows a speculator to focus purely on how to make a profit from the currency’s volatility.

Moreover, it can level up your trading strategy; should you consider at one point that the price will drop, you can quickly open up a short trade which is not always possible on exchanges.

If you choose to own and trade actual Bitcoins, this means signing up to a an exchange market which is not always a simple process. Verification of your identity takes time, the exchanges are often unregulated and funding your account with your chosen currency can be difficult or costly.

Still, a benefit of owning actual cryptocurrency is that you are able to use them to purchase the increasing amount of products and services becoming available.

Let’s start trading

The first thing you need to do to start trading the cryptocurrency is to decide whether you think the price of will rise or fall. You can make this work either way, using short and long trades, but knowing how much you are prepared to risk beforehand is wise. Never risk more than you can afford to lose.

Currently, the quickest and most secure way to trade the currency would be with an online broker where they are fully regulated and account creation is simple. For people looking to use the currency to buy goods and services then cryptocurrency exchanges are the best option. Either way, anyone looking to get into Bitcoin will be in for an exciting ride as we see how this new technology plays out in the coming years.