Is Cryptocurrency Trading Profitable?
First of all, what is a "cryptocurrency"? Generally speaking, it is a digital currency that uses cryptography to maintain the security of transactions. Simply put, think of it as a means of electronic exchange. Cryptocurrency can also be classified as a subset of digital currencies and alternative currencies. Types include: ● Bitcoin - the first decentralized cryptocurrency ● Altcoins - any peer-to-peer cryptocurrency other than bitcoin ● Litecoin - a peer-to-peer Internet currency based on the Bitcoin model ● Ripple - payment protocol that uses blockchain technology to connect all the world's disparate financial systems ● Peercoin: uses both the proof-of-stake system and the proof-of-work (bitcoin only uses proof-of-work)
History of cryptocurrencies
Bitcoin was created in 2009 by Satoshi Nakamoto, who published a paper on the "peer to peer" electronic money system. It was based on an earlier digital currency known as B Money, which is attributed to Wei Dai. The first component of the blockchain, or public ledger, was implemented through the difficulty of mining or proof of work. Satoshi Nakamoto then developed bitcoin with the intention of creating a means that would circumvent the government laws used for monetary exchange.
Since then, Bitcoin has become the most successful cryptocurrency to date due to its decentralized nature. However, it wasn't until 2013 that bitcoin actually made it into the mainstream. In this year, online retailers began accepting it as a form of payment and its value increased steadily, going from $13 in January 2013 to $1,100 in November 2013. Today it is estimated that there are 218 million active users trading on cryptocurrency exchanges worldwide.
Market analysis
The demand for bitcoin influenced the emergence of other alternative cryptocurrencies such as Ripple and Litecoin. Due to its decentralized nature, bitcoin is considered an extremely volatile currency. This means that its price fluctuates a lot in short periods of time, more than the national currencies used by governments.
For example, China's government banned financial institutions from using bitcoins in December 2013 for fear of how it would affect their economy. To put things in perspective, the Russian ruble fell 10% against the dollar in two days. As a result, the value of bitcoin fell by 20% in that same period.
The anonymous and decentralized nature of most cryptocurrencies makes them especially popular with people who want to be outside the government's control, such as those involved in black market activities (e.g. Silk Road) or in illegal transactions (drugs, murders, etc.).
In addition, its constant fluctuation makes it difficult to use it as a medium of exchange and real currency. Instead, bitcoins are often traded like stocks, with prices adjusted based on supply and demand.
Summing up: ● Bitcoins cannot be controlled by any bank or institution ● Transfers are completely transparent ● It is easy to set up ● Very secure ● Widely used by merchants
- Extremely volatile ● Not yet widely accepted as a real currency ● Often used for illegal activities (e.g. Silk Road)
in 2013 approximately one million dollars in bitcoins were traded every day. Today, this figure has risen to more than $2 billion of bitcoins traded daily. This figure is still considered relatively low when compared to other forms of trading such as Forex (foreign exchange market), which has an estimated average of 1 trillion dollars a day in foreign exchange operations.
Bitcoin is the world's most popular cryptocurrency to date and continues to gain support among major retailers, including Overstock, CVS and Home Depot, while JPMorgan Chase CEO Jamie Dimon has called Bitcoin "a fraud" It is the next largest cryptocurrency but with not as many users as bitcoin.
Ethereum is a cryptocurrency and blockchain platform announced by Vitalik Buterin at the North American Bitcoin Conference in Miami, announced in January 2014. It provides a cryptocurrency token called "ether" and also features the functionality of smart contracts. Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer.
Its development was funded by an online sell-off between July and August 2014, in which 60 million tokens were sold to contributors of bitcoin and other cryptocurrencies, 12 million of which went to the first sponsors of the project and the development of the platform.
The idea of an open software platform based on blockchain technology that allows decentralized applications to be built running on this platform has been a hot topic in the digital currency community for some time. This is Etherium, another type of cryptocurrency next to bitcoin, developed after Bitcoin was developed.
Its enthusiastic supporters believe that Ethereum will manage to overcome all the technical problems related to blockchain technology and bring their idea of an ideal system closer.
The potential problem you may face is your young age. And if developers are not able to come up with any solutions regarding the security of their product or its improvement in the future, it can lose its popularity over time, which can result in a significant financial loss for investors.
However, etherium has already overcome many obstacles during its launch and became very popular among users, so we cannot underestimate this cryptocurrency when considering cryptocurrency investments.
When it comes to trading cryptocurrencies, it's important to understand that you can't treat a cryptocurrency like a "typical" currency. You can't hold a bitcoin in your hand or keep it under the mattress like you would with a normal coin.
Due to this fact, you have two options available when trading cryptocurrencies: brokers and exchanges. A broker is basically an intermediary that helps traders buy and sell the cryptocurrency they have chosen, coordinating trades and keeping the currencies in custody until the transaction is completed. Exchanges are platforms on which cryptocurrencies can be bought and sold at current market prices.
The advantage of using an exchange is that they provide instant liquidity through various payment methods, such as credit cards, bank transfers (ACH), etc., while brokers offer direct access to individual currencies and price matching.
Both brokers and exchanges can be a great option depending on your personal preferences. If you're not familiar with the cryptocurrency market, you might prefer the convenience of using a broker so you don't have to worry about security details, such as creating an online wallet or tracking exchange rates. On the other hand,
if you want to have more freedom to choose the currencies you want to trade, an exchange is probably more suitable for you. In addition, some people may feel overwhelmed by the technical jargon that most exchanges use and therefore prefer a brokerage service that buys/sells/stores cryptocurrencies on their behalf, just like a bank would handle normal currency transactions.
What kind of cryptocurrency should I invest in?
Here are 4 tips from our experienced financial analysts:
- Ethereum (ETH).
Etherium is still the second most popular cryptocurrency, and this despite the fact that its price has been falling for a long time. It will probably keep going down, but there are a few reasons why we think it could end up at the top in terms of market cap. There's a chance the price of ether will go up again, so if you have extra money out there, wait until August 1 or September 1 before buying ethers. You should probably buy them earlier if you really want to hedge your bets against bitcoin, because the chances of another currency surpassing bitcoin after it goes up so much are pretty slim.
- Bitcoin Cash (BCH). Bitcoin cash could be a good investment in the short term, but in the long term it has a lot of problems. It is not as secure as the bitcoin blockchain and is controlled by a small group of people, which makes its future somewhat uncertain.
- Litecoin (LTC).
Litecoin is very similar to bitcoin in what it aims to achieve, so if these two coins go up or down at the same time you won't see much difference in their values. However, what we really like about litecoin is that it is becoming a more widely accepted means of payment than any other cryptocurrency out there. This may soon change as etherium Dash will likely start offering debit cards that can be used to convert cryptocurrencies into cash instantly.
- Ethereum Classic (ETC).
Ethereum classic is basically an etherium clone, which means it benefits from the advantages this coin offers. But there are also some disadvantages of ETC, but if you are looking for an alternative cryptocurrency besides bitcoin, then etherum classic might be your best option right now. Etherum classic has a much smaller market capitalization than bitcoin or litecoin, which makes its price more volatile and easily manipulated. Its future performance will largely depend on what happens to other currencies in the coming months.
If you think any of these coins aren't worth investing in, then you should probably withdraw your money now because things don't seem to be working in your favor so far. TIP: Don't buy any bitcoin cash until after August 1, as that's when the hard forks will begin.
4 More cryptocurrencies that could be worth your investment: Ripple (XRP), Dash, Monero (XMR) and ZCash (ZEC).
NOTE:
Ignore the other cryptocurrencies for now because they all have a much smaller market capitalization than these 4 coins and therefore their prices are easily manipulated by the biggest players in the cryptocurrency markets. If you want to invest in them, go ahead, but don't put all your money into them because investing in too many different cryptocurrencies will increase your risk of losing everything if one of them goes down while others go up.
Cryptocurrencies are not a safe investment, but they can be a good short-term investment.
There are 4 currencies you should consider investing in: Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), and Etherium Classic (ETC).
Don't buy any other coins until after August 1 because that's when hard forks start. By then you will have a better idea of how these currencies will behave in the future.
Ignore Ripple, Dash, Monero and Zcash for now because their prices are too easy to manipulate by the big players in the market.
- Introduction. Cryptocurrencies can be seen as part of a global economic diversification plan to escape the ever-devalued fiat currencies and the current economic system in general. This means that investing in cryptocurrencies is not the same as buying a stock or a commodity, which goes up and down based on its market value. The situation is more complicated with cryptocurrencies because they have a lot of speculation behind them and their prices are easily manipulated by the big players who want these coins to go up or down.
- There are many different opinions out there about bitcoin and whether it is worth investing in. In this article we are going to tell you what our opinion is on this issue, but first we are going to clarify some data.
- Why buy cryptocurrencies?
There are several reasons why you should consider investing in cryptocurrencies: 1- BITCOIN IS THE FRONTERODE DIGITAL CURRENCIES. It was the first coin to start it all in 2009 and also enjoys greater prestige than other coins out there, meaning its price is much more stable than any other cryptocurrency.
This gives bitcoin a huge advantage over other currencies, but this stability can also be seen as one of its main disadvantages because it has become difficult to double or triple your money with bitcoins. The volatility of the market is too great for most people to try to make this amount of money from it right now.
2- BITCOIN IS NO LONGER A CURRENCY, but an investment tool. You're not likely to spend your bitcoins anytime soon. And if you do, then you should think twice before spending on something like a cup of coffee, because your money will lose some value when you do. This means that the only way to make good profits with bitcoins today is to sell them on exchanges or exchange them for other cryptocurrencies once they rise in price (or if you need cash).
The price of bitcoin has risen and fallen like a roller coaster this year, but overall it has increased in value exponentially, making most people un tempted by the benefits that can be made with this currency. If you sold 10 bitcoins back in 2013, when each was worth about $200, and bought them back today, they would have been worth more than $34 million, for a profit of more than $3 billion! It's impossible to say that bitcoin is a bad investment, but it's not happening as fast as many expected. Many bitcoins have been lost forever and the number of people using this currency continues to decline.
This means that its price will continue to rise for a while, but this does not mean that it will return to $200 at any time or even less than that.
3- THE FACT THAT CRYPTOCURRENCIES ARE DECENTRALIZED IS THEIR MAIN ADVANTAGE OVER FIAT CURRENCIES. One of the great advantages of cryptocurrencies over regular currencies is the fact that they are decentralized. Fiat currencies today can be manipulated by central banks and other financial institutions that control them, but there is no one in charge of cryptocurrency transactions.
No one can decide what the price of bitcoin will be tomorrow, because it is up to investors to buy and sell them. This is also an advantage for altcoins that aim to unseat bitcoins in power. Some people might think that this means that cryptocurrencies are not safe places to keep your money or invest, but nothing could be further from the truth.
4- INVESTING IN CRYPTOCURRENCIES IS A WAY TO PROTECT YOUR MONEY FROM THE CURRENT ECONOMIC SYSTEM. No matter what you do at home with your money, if you have it in a bank account in any country in the world, its value will drop dramatically when inflation affects fiat currencies. Investing in cryptocurrencies today is like investing in gold.
The economy is built around the U.S. dollar and has been for a long time. This means that any money you have in your bank account can be devalued over time by inflation, which is stored every year so banks can charge more interest to their debtors. This makes it difficult to save a lot of money if you don't have a good job or own a business.
Cryptocurrencies aim to change all that by allowing people around the world to invest without being subject to the inflation of fiat currencies out of their control. Many people see investing in cryptocurrencies as a way to escape financial collapse, but this is also not always true, as they are still linked to the actions of governments with the economic problems that surround them.
INVESTING IN CRYPTOCURRENCIES WILL HELP THE VIRTUAL ECONOMY GROW. In fact, it doesn't even have to be a physical currency. Many governments around the world are developing their own cryptocurrencies for their citizens to use, because they see it as an easy way to modernize the economy and reduce the power of banks over people's money.
Venezuela launched its own cryptocurrency called "Petro" in February 2018, which was intended to help them save enough foreign exchange reserves to import goods their citizens needed. This would also allow them to save some money without having to rely on investors who might not be willing or able to stay solvent long enough for Venezuela to pay off its debts.
ETHEREUM VS BITCOIN - WHAT IS THE BEST INVESTMENT?
Bitcoin is the most popular cryptocurrency in the world and has given a lot of money to investors over time, but it's not perfect either. Ethereum was created in 2013 by Vitalik Buterin, who founded the company that manages the development of this currency; This differentiates it from other cryptocurrencies because they are not managed by private companies or individuals.
However, there are many things to know about Ethereum before you decide to invest in it. The value of Bitcoins has fluctuated greatly since their inception, with prices ranging from $14 to $220 in just four years. This means that investing in bitcoins right now can be an excellent idea if you want to control your risk.
Ethereum, on the other hand, has grown close to 4000% since last year and continues to attract investors at a rate that few cryptocurrencies can match. You may be wondering if Ethereum is as good an investment as bitcoin, and the answer isn't clear either. The value of bitcoins has risen a lot in 2017 to reach prices above $ 4000 per currency because their supply was limited and the growing interest around them increased demand exponentially.
On the other hand, ethereum will never have more than 100 million units in circulation, which means they remain scarce. Investors consider this digital currency to be promising especially because it eliminates transactions from the blockchain; this saves space on the computer for other things instead of forcing them to save each transaction on the platform. This makes it possible for smart contracts to work without worrying about third parties controlling your money, but it also means that Ethereum has a different structure than bitcoins.
However, keep in mind that this is not professional trading advice, just my opinion! Trade at your own risk AND always do your own research (DYOR). I am not a financial advisor and this is not financial advice. Thanks for reading :>
DISCLAIMER:
I am not a financial advisor nor am I giving financial advice. All content presented here is solely my opinions and ideas and should not be treated as absolute truth or wisdom of any kind.
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