Also known as an alternative currency, a cryptocurrency is used by people worldwide and is not regulated by any national government. The fact that this currency is a financial exchange existing outside the limits of any state monetary policy makes it very empowering and popular.
So that means these digital currencies are characterized by decentralized control. A virtual currency’s value and supply are controlled by two key elements—the first is the activities of cryptocurrency users, and the second is a set of super-complex protocols that are built within the governing codes. That is, the price of these digital currencies—bitcoins and their clones—will never get influenced by the decisions of regulatory authorities and central banks.
Talking of bitcoins, they are one of the most prominent and first cryptocurrencies used widely. And it is worth mentioning that nearly hundreds of cryptocurrencies are there while more are springing into existence nearly every month. Most importantly, cryptocurrencies are exchanged for fiat currencies through special online markets; this means, each digital currency will have a variable rate of exchange with all the major currencies—such as pounds, euros, yens, and US dollars.
And when it is about ROI, cryptocurrencies—chiefly, the bitcoins—sure boast some of the best figures in the financial history. So by following a couple of key strategies and having connections with the best brokers and traders, you too can expect to make some quick bucks by taking part in the day trading of these virtual currencies.
However, before jumping straight to the basics of day trading of cryptocurrency and choosing the right crypto brokers, let us go through the interesting low-down on who all are involved in developing the cryptocurrencies, and what led to the development of the world’s most prominent digital currency—the bitcoins.
Here is one note to all the readers: We are dividing this post into different categories that are clearly delineated so if you want to skip any topic, then you are free to do so. Now, let us begin with the circumstances that led to the rise of bitcoins and other cryptocurrencies.
The interesting history of bitcoins or digital gold
We know that nobody likes history, but the background contexts that shaped bitcoins and other digital currencies are certainly worth a read—especially for bitcoin enthusiasts. Bitcoins were developed in the wake of the 2008 financial meltdown; this crisis was a very clear motivating factor that led to the creation of the world’s most powerful currency.
On October 31, 2008, bitcoins were revealed to the public for the very first time through a white paper. This 8-page paper is extremely well-written—and if you want to know why bitcoins, or any digital currency, is a compelling investment and how do they work, then you should go through the text right away.
However, we will not delve too much into the technicalities that govern the ways through which bitcoins work—here, we will focus on the history of this variant of virtual currency. (If, in case, you want to know how bitcoins work, then your best bet is completely reading the white paper.)
The bitcoins are still known as digital gold because they were designed to have all the best properties of gold. To begin with, like gold, this virtual currency had its decentralized nature and inherent scarcity. After that, the currency was designed to solve almost every single shortcoming of gold by allowing itself to be transactable in different denominations quickly.
But how does it manage to do that? Well, by digitally emulating the production of gold. So as most of us know, gold is mined from the ground; similarly, bitcoins, too, are digitally mined. The production of every single bitcoin is managed by a code that instructs you to find a specified answer to any given problem for unlocking new bitcoins. Now, the concept of digital mining sure sounds to be very interesting—so let us read a bit about how this and many other cryptocurrencies are generated in the first place.
Generating cryptocurrencies and the whole computing shebang
Indeed, cryptocurrencies along with blockchain technology are radically transforming the way money moves around the digital world. That means we have to first understand the way any cryptocurrency is generated. When it comes to generating digital currencies, it comes down to miners. These miners are the record-keepers for the entire community of virtual currency; they are the implicit arbiters of the value of these currencies.
Now, these miners work with really vast quantities of computing power that is generally found in private server farms; these farms are usually owned by large-sized mining collectives that include dozens of miners and individuals. In such places, the bitcoin miners leverage high-tech methods for verifying the accuracy, completeness, and security of any virtual currency’s blockchain. You can think of the scope of this mining operation quite similar to that of searching a new stream of prime numbers; such a task certainly will need mammoth computing power.
Apart from the general currency-mining activities, a cryptocurrency user should even leverage huge amounts of computing energy for recording all the related transactions. In addition to recording such transactions, they should even spend some of this power in receiving all the newly generated digital-currency units and the transaction fees that are paid by different users in return. This management of computational power is very important for maintaining a digital currency’s stability.
The computing energy is managed by cryptocurrency developers that build different protocols on the most advanced principles of computer engineering and mathematics. Because of this, these protocols—which make a security blanket as a whole—are almost impossible to hack or break.
And that is exactly why it is so difficult to counterfeit or duplicate these protected currencies. That is not all as these protocols are even used for masking the identities of all the users of digital currencies. With such masking techniques, it is very difficult to attribute fund flows and other transactions to any specific individual or group. Now, since it is clear that how cryptocurrencies are mined, let us focus on the basics of trading these virtual, powerful monetary units.
The basics of day trading the cryptocurrencies
Like any other trading, alt-coin trading is immensely volatile—but taking the risk is worth the reward for sure. That is because, in 2017, the bitcoins have nearly doubled in value; and even some other digital currencies, such as ethereum, have soared to new heights.
For facts, if we consider bitcoins, then this digital currency has surely surged since December 2017; as of November 15, 2017, this currency is positioned at $6861 from $968—its value by the end of December 2016. Now let us focus on ethereum, the top rival of bitcoins. Popularly known as ether, ethereum has experienced much more than 4,742 percent growth; as of November 15, 2017, ether has climbed all the way to $339 from its December-2016 value of $7.
Presently, there are a lot of alt-coins that have flooded the market. While many of the cryptocurrencies will fade away with time, some of them sure have depicted a bullish nature and are skyrocketing toward the top of different trading charts. The reason is that more and more of these digital currencies are being adopted in the society nowadays.
Among all the cryptocurrencies present in the market today, the top three that rank high in terms of tradability are bitcoin, litecoin, and ethereum. More and more millennials are not playing much in the traditional stock market; rather, many of them have started trading cryptocurrencies, so now is the best time to enter this market before it becomes supersaturated. But before beginning the day trading of these digital currencies, it is better to know some unspoken laws of the land.
Knowing the blockchain
A blockchain is a bit difficult to decode or understand. So we, too, will not dig into the complex details because that will confuse you. But we will surely give you a basic idea of what a blockchain is all about. To begin with, a blockchain can be thought of as an ever-growing database of records; this database or list of records is divided into small blocks that interact with one another and are secured with the help of cryptography. These blocks may even serve as a full-fledged public ledger that is used for recording a number of transactions happening between two users or parties. A blockchain is ideal for every investor who wants to evade the chances of hacking.
Yes, blocks can almost always prevent any incidents of hacking; that is because even if a hacker has compromised a single block, the network will simply ignore it. For hacking the complete blockchain, each and every computer connected to it should be hacked at the same time. Now, with popular cryptocurrencies, such as bitcoins, every single computer among the millions should be hacked at the same instant. Well, that is highly unlikely. So since you have better understanding of what a blockchain is, it is time to understand popular virtual currencies.
Know what is trending
As you already know by now, the most trending coins today include litecoin, bitcoin, and ether. And for all intents and purposes, it is not at all advisable to burden yourself with learning about each coin. That is precisely because there are more than hundreds of coins that are currently trading upward of the dollar’s value. On the contrary, there are many other coins whose value can be compared with that of penny stocks.
For all the beginners who are starting the day trading of cryptocurrency, the three digital coins are one of the hottest investment commodities functional right now; they are the ones that have a proven track record. If, however, you are too inclined to trade smaller digital currencies, then you should completely research about bitcoins and their use as well as potential volatility. Put simply, a few coins will fizzle out while others will totally explode the stock market.
Virtual currencies are volatile, period!
As far as the volatility of the digital currency is concerned, bitcoins have become a hot investment option for many. If this cryptocurrency’s trading prices are to be observed, then they are nearly optimistic especially since March 2017. A bitcoin’s volatility is much higher than that of a traditional stock market or gold.
For example, from June 2017 till September 2017, the bitcoin’s price has roughly fluctuated from $3,000 to approximately $2,000—and, then, this digital currency made a very powerful comeback by jumping to nearly $5,000 and November up to $8000. So, basically, you need to accept the commodity’s excessive volatility and start trading effectively. Also, for effectively trading these digital coins, you should connect with a very reliable cryptocurrency broker—we will come to the part of picking a credible crypto broker later in the post.
Setting up an exchange account
After going through the basics of virtual currencies, if you feel okay to trade these coins, then it is the right time to open your own exchange account. Now, you can open your account on different exchanges depending on your currency, country, and general preferences. Once you are done with establishing your account, you can get connected with different brokers without hassles.
There are many independent brokers, such as eToro, that have their own apps for simplifying your trading experience. For example, if we take the eToro broker platform, using it will let you get connected to many financial markets at any time anywhere. This is a robust, flexible platform that can let traders manage their portfolios, trade, and even engage with other buyers or sellers on the go.
Funding the account
After the account is established and secured, you need to add money to it. While funding the account, you will have to decide a number of things such as selecting a payment method. While trading the digital coins, you have the power to fund your individual account using a credit card, bank account, or debit card.
If you are using your credit card or debit card to fund the trading account, then you should be aware of the fact that there is a 3.99 percent charge. However, when you will use a bank account, you will have to pay a 1.5 percent charge. That is why it makes so much financial sense to link a bank directly to the trading account.
So learning the art and science behind day trading the cryptocurrencies can still let you get a tidy profit. However, for this, you have to follow all the latest trends and become totally well versed in the specifics of every coin. And when it comes to getting the best deals in day trading any digital currency, you should get in touch with the right broker. That is why the next part of this post is about the ways through which you can differentiate a credible crypto broker from an unprofessional one.
Picking the right crypto broker
Many crypto investors are still directly trading through exchanges, and that brings up the question of why a broker is needed after all? However, there are a number of reasons why brokers are so much important for effectively trading in bitcoins and other similar virtual currencies. So that is why we are giving you all the top factors that will help you decide which crypto broker is the best of the bunch.
Smooth user experience makes all the difference
Cryptocurrencies work a bit differently from any traditional money system. Receiving and sending funds completely depend on many third-party wallet services that are user friendly. The main problem with every second crypto broker is the presence of very cumbersome user interface. So choose a broker’s platform that delivers the most simplified, streamlined user experience every time.
Reliability comes with transparent fee structure
Every credible broker will always resort to the most reliable strategies and methods of trading. For instance, with IQ Option—a trusted trading broker—there is absolutely no circumstance where the speculators will have to pay an additional fee for doing the trading.
App is the way to go
Well, mobility becomes super necessary today when you will have to make or break deal-critical decisions every day. And when it comes to empowering traders with mobility, they should have an app by their side. So it is better to pick a trader who has an app that lets speculators, like you, make successful trading decisions on the go.
Crowd wisdom to close the deals that matter
Unlike many trading portals, few broker platforms—for example, eToro—is aimed to let you leverage the wisdom of popular traders. This wisdom can seriously go a pretty long way in improving your returns over investments. A social trading platform will always let you observe the hottest trading trends of other more successful and experienced traders in the market. With special crowd wisdom, it becomes possible to speculate key trading parameters such as market positions, individual trading strategies, and other similar factors.
Faster setup times for smarter decision-making
Nearly every day, more people want to dip their toes into trading virtual currencies. These people can be experienced speculators at traditional stock exchanges or beginners. But the bottom line is that these people should be able to make key decisions on time every time. And for that, these investors need to have a setup at the ready as soon as they are verified by a broker. So, ultimately, it makes complete sense to tie up with a broker that can quickly set up so that you can begin trading with minimal downtime.
So, ultimately, the truth remains one and only one—every blockchain asset comes with an opportunity to make a profit. And for making that one smart move in trading these digital coins, you should take the support of a qualified broker platform right away. With such a platform, you will surely know when it makes total sense to buy or sell a bitcoin, an ether, a litecoin, or any other digital currency.