First of all, in order to understand cryptocurrency trading, you have to know what cryptocurrencies are. Cryptocurrencies are a revolutionary piece of technology that makes use of computer science, cryptography and mathematics.
A cryptocurrency is essentially a digital record of a transaction on a public ledger called the blockchain. This blockchain is an immutable record of all transactions that have occurred on the network.
In order to make the blockchain immutable, some advanced cryptography concepts have to be employed in order to secure the transactions and record. These are almost impossible to crack which is why this record of a transaction cannot be faked.
The network for a cryptocurrency is also decentralized. This means that there is no centralized agency that controls the supply and flow of the cryptocurrency. It is decentralized across the entire ecosystem through a collection of “nodes”.
Cryptocurrencies can also be sent to someone else through the network in an effortless fashion. These transactions are then confirmed and verified by computers on the network that are called “miners”.
In much a similar way to how gold is mined from the earth, cryptocurrencies are created through this mining process. They solve the mathematical problems that underpin the network.
Which Cryptocurrencies are There
The original and most well know cryptocurrency is Bitcoin. This was created by a man called Satoshi Nakamoto. He wanted the world to be able to transact and store their money without the need for a centralized bank.
Bitcoin has since had ups and downs but has had one of the most monumental rallies in the past year. It has gone from under $1,000 to over $18,000 in a matter of months.
However, Bitcoin is only one part of the picture. There are a number of other cryptocurrencies that people can invest in that all have different technologies that underpin them.
The second most valuable cryptocurrency by market capitalization is Ethereum. While Ethereum is also a cryptocurrency (the ETH tokens), the purpose of it was different to that of Bitcoin. Ethereum was created to allow for the creation of decentralized applications.
You also have cryptcoins such as Monero and Zcash which were developed for the purposes of being privacy conscious coins. Unlike Bitcoin and Ethereum, these coins can avoid any of the problems that may be associated with blockchain audits.
There are coins such as Iota and Ripple. The latter was created in order to change the way we thought about cross border banking. They are working with the banks in order to provide a way for them to easily send money abroad. Iota, on the other hand, was developed in order to provide cryptocurrencies which can be used on the Internet of Things (IoT).
How to Trade Cryptocurrencies
Cryptocurrencies are indeed a unique instrument to trade. They are hard to read and are driven by a lot speculation in the market. They are driven by large traders and are highly susceptible to pump and dump schemes.
It is for this reason that trying to trade cryptocurrencies on a day to day basis is incredibly tricky. A coin that seems to have all going for it and is rallying can easily retrace the gains and fall by more than it rose in the previous day.
It is also hard to determine what news is likely to drive coins. Sometimes there may be something that you are certain will drive prices but it turns out to be the opposite. There are also times when a Coin may rally in anticipation of an announcement and then will fall to the floor if nothing has come through.
All of these are therefore reasons why one should not try and trade these coins on a day to day basis. The most effective method to make money with cryptocurrencies is through an understanding of the underlying technology and investing based purely on that.
It also may sometimes help, if you want to regularly trade cryptocurrencies, to make use of online platforms such as Twitter and Facebook. It is here that a lot of the cryptocurrency news is spread throughout the internet.
What are Trading Mentors
Forex Baba, like many other companies out there, is tryin to help traders understand the fundamentals of cryptocurrencies and how the underlying technology is likely to impact the price of the coins.
With a great deal of these cryptocurrencies, there are highly technical documents that describe how they work. These are called “whitepapers” and are the backbone of the technology. Our members read the whitepapers in full and try to help traders understand how the technology will benefit them.
Want to get in Touch?
If you are interested in trading cryptocurrencies and want to make use of the advice and services of Forex Baba, then you can find out more about us.
If you had more specific questions then you could always email us on email@example.com. A member of our team will get back to you and discuss cryptocurrency trading options and how you can achieve the returns that you have always wanted.