Have you heard your co-workers talk about Bitcoin but are not familiar with the concept? Don’t worry; in this post, you will find information about this digital currency and its main advantages and disadvantages.
Do you want never to be silent again when talking about cryptocurrencies? Keep reading!
What is Bitcoin?
It is a booming currency that, in addition to being digital, has a series of characteristics that differentiate it from the Euro, the Pound or any other traditional currency.
Therefore, bitcoin brings many benefits to users and is currently the cryptocurrency (currency based on cryptography) with the most users.
Anyway, you should know that there are many digital currencies on the market. If you are interested in knowing them, in this link, you can find news about Bitcoin and any of the most popular virtual currencies of the moment.
Advantages of Bitcoin
As we said, bitcoin has many benefits that have made it a real alternative to which more and more people join. These are some of them:
- International currency
With this currency, you can travel outside the European Union without wasting time changing in foreign exchange houses. Bitcoin works worldwide, except in some countries with totalitarian regimes that have their cryptocurrency.
Although, as we say, the change is unnecessary, you can convert them to the traditional currency you want whenever you want. In addition, they can be purchased with any of them.
- Security is one of its main attractions
Bitcoin presents an advanced encryption system with which counterfeiting is practically impossible. In addition, the transactions are pseudonymous, and, therefore, it is not mandatory to reveal the identity of the parties.
- Decentralized currency
This currency has in its decentralization one of its main peculiarities. Any state or financial power does not run it, and that allows independence that many users appreciate.
In addition, this detail ensures that you are the only person who manages your money. Therefore, if you have a losing streak, your accounts will not be frozen.
- Very agile transactions
Transactions are made between individuals, and these are very fast (almost immediate) and very cheap since, among other reasons, you avoid bank commissions.
- You can always know its real value
The portals specialized in cryptocurrencies publish the currency’s price at all times, 24 hours a day. This is based on supply and demand and, therefore, the more people use Bitcoin, the more this will rise.
Disadvantages of Bitcoin
And of course, Bitcoin also has a series of disadvantages that make some people not trust this digital currency. Here are the main ones:
- Investing in Bitcoin can be risky
As with any investment, it can be won or lost. Of course, the volatility in Bitcoin is very significant, and you can go from success to failure in a very short time.
Anyway, you should know that many people have become rich doing this activity and the trend is positive.
How is it invested? The most used way is as simple as buying Bitcoin in the hope that its value will increase.
- Not accepted in most establishments
Indeed, most stores are still skeptical of this or any other cryptocurrency. In any case, more and more people accept them.
- It can be used to carry out criminal actions
The secrecy and anonymity that Bitcoin manages to offer to its clients can be well regarded by organizations or criminals to carry out illegal operations or not comply with their tax obligations.
- You cannot lose the digital wallet
To have Bitcoin, you need to download a virtual wallet (an app) to store them. If you lose your physical portfolio we are talking about, as a general rule, you can lose between 50 and 200 euros. On the other hand, in this case, you can lose the equivalent of thousands of euros if you do not remember the password to your wallet. Trust us; it happens more than meets the eye.
- You need internet
This is less and less of a problem because the internet has reached practically the whole world. Of course, you can run out of data and find yourself with a real problem.
Why trade cryptocurrencies?
When you trade cryptocurrencies , you speculate on whether the market price you have chosen will go up or down without owning the digital asset. This is done through derivative products such as CFDs.
The benefits of cryptocurrency trading include:
The volatility of cryptocurrencies
Even though the cryptocurrency market is relatively recent, it has experienced significant volatility due to a large amount of short-term speculative interests. For example, between October dIn 2017 and October 2018, the price of bitcoin increased to $ 19,378, while it also fell to $ 5,851. Other cryptocurrencies have been relatively more stable, but new technologies tend to attract speculative interests.
The volatility of cryptocurrencies is part of what makes this market so exciting. Rapid intraday price movements offer investors the opportunity to go long and short, but it also causes volatility to increase. Therefore, if you decide to explore the cryptocurrency market, ensure that you conduct proper research and develop a risk management strategy.
Cryptocurrency market hours
Normally you can operate in the cryptocurrency market 24 hours a day and 7 days a week since there is no centralized management. Cryptocurrency transactions take place directly between individuals in cryptocurrency markets around the world. However, there can be downtime when the market adjusts for infrastructural upgrades, also known as forks.
you can trade cryptocurrency and fiat currency pairs (US dollars) from 5:00 on Saturday to 23:00 on Friday (CET time).
Liquidity measures the time it takes to convert a cryptocurrency into cash without impacting the market price. Liquidity is essential because it offers better prices, faster transactions and greater precision in technical analysis.
In general, the cryptocurrency market is considered illiquid because the transactions are dispersed in different markets, which means that, in comparison, smaller operations can have a large impact on the prices of the cryptocurrency. This is precisely one of the reasons why the cryptocurrency markets are so volatile.
However, when you trade cryptocurrencies with IG, you can achieve greater liquidity as we obtain prices from multiple execution venues on your behalf. This means that your trades are more likely to be executed quickly and at a lower cost.
The ability to go short or long
When you buy a cryptocurrency, you buy the asset in advance in the hope that its value will increase. However, when you trade on the price of a cryptocurrency, you can make a profit whether the price goes up or down. This is known as going short.