Bitcoin Trading In Practice (Proven Tips)

How Traders Can Really Benefit From The Cryptohype

Especially in the last weeks Bitcoin Trading is again a popular number, since price seems to shift upwards again after a long bear market.

The attraction of Bitcoin is primarily fed by the very volatile price development of this new type of digital currency. But there are other reasons why Bitcoins are so tempting.

You will find out what these are, what yields are normal in bitcoin trading and how you can achieve them.

Think of Warren Buffett’s advice before you do:

Invest only in something you understand. That’s why I want to give you some basic information about what a bitcoin is all about.

Bitcoin – What Is It Anyway?

To put it bluntly: Bitcoin is a kind of digital payment method. The main feature of this system is its decentralisation. This eliminates all middlemen during the processing of money transfers and thus saves costs and time. The rate of this digital’currency’ is not fixed or linked to any other currency, but is determined by supply and demand. A basis for being able to trade with it. Here is Bitcoin’s official website.

Bitcoin, Who’s Behind This?

The idea of this payment system was brought to life by a person – perhaps also a group of people – who has remained anonymous until today and who wanted to revolutionize our monetary system.

This inventor appears under the pseudonym Satoshi Nakamoto. In the meantime he has fallen silent. He took up the original idea and preparatory work for a digital currency of a development team from the 1990s.

This project probably failed mainly because of the ‘crackability’ of the system. Nakamoto developed it over the years and made it virtually unbreakable. With this further development of the system, Nakamoto went public at the end of 2008 and Bitcoin was born.

Once you realize the potential of the bitcoin, it goes without saying why this developer wanted to remain anonymous.

Bitcoin as a means of payment

If you pay with Bitcoins, you have a significant time advantage. Traditional bank transfers still have a term of at least one day, often even considerably longer. Bitcoin transfers, on the other hand, are always processed or confirmed within one day.

But opposing to common assumption, bitcoin is not anonymous. It is pseudonymous, means that anyone can create an account / bitcoin address and transfer without a third party allowing it – but the payments are transparent on the blockchain.  Therefore it is interesting for many to hide their identity when buying bitcoins, preferably anonymous and without KYC verification.

In Germany, paying with Bitcoins is hardly to be found in public. It will be difficult for you to exchange goods for bitcoins in the stationary trade. The same picture in the service sector. We are lagging behind other countries, as is usually the case with new things. But what is no problem for us Germans either, is the direct payment between individuals, or between customers and companies around the globe.

Where Can You Store Bitcoins?

Save your Bitcoins in virtual purses called wallets. These provide you with online platforms and trading places. However, it is better to back up your bitcoins multiple times on different media and in different locations, even offline.

The advantage of the Bitcoin system is that once payments have been confirmed, they can no longer be reversed. For sellers this is a certain protection against fake orders. In the role of buyer, however, you have to think carefully about who you will do business with if you have to pay in advance.

Buy Bitcoins: 3 Options – How Does It Work?

To buy something with Bitcoins, you must first own Bitcoins. How to get to Bitcoins is easily explained. There are three possibilities:

The first is to join the worldwide Bitcoin network and become a part of the decentralized community that maintains the payment system. This is called mining.

You help to confirm new transactions from other Bitcoin users. This is necessary because – as mentioned at the beginning – there are no central issuing and settlement bodies (central banks and commercial banks) in the Bitcoin universe.

For this confirmation of transactions – also called digging, mines – you can only use your own PC, or you can also approach the whole thing as an investor and buy from so-called ‘cloud mining pools’ digging capacities of professionals.

For your provided computing power, the network rewards you in the form of bitcoins, which are credited to you.

The second way to get Bitcoins is to exchange recognized means of payment like Euro or Dollar for Bitcoins. This works if, for example, you accept payments in bitcoin when trading goods.

The third way leads directly over a stock exchange or a Bitcoin trading broker. These are used to convert Bitcoins into traditional Fiat currencies or other alternative digital currencies.

Now the keyword has fallen, because these platforms also give you the possibility to trade Bitcoin and become active as a speculator.