How to Trade Cryptocurrencies – Part 1

How to trade cryptocurrencies - part 1
TradeGM Analysis date_range December 8th, 2020

Cryptocurrencies took the finance world by a storm when they first emerged. As you may already know, Bitcoin is the world’s first crypto. Investors vouched for the first decentralized currency in the world that could offer them financial independence from government intervention.

Cryptocurrencies took the finance world by a storm when they first emerged. As you may already know, Bitcoin is the world’s first crypto. Investors vouched for the first decentralized currency in the world that could offer them financial independence from government intervention.

Blockchain has been a breakthrough technology for the fintech industry. It offers a decentralized ledger system instead of keeping all the data in one server. It is practically impossible to hack into this data and falsify it.

Trading cryptocurrencies has easily crossed every tech-savvy millennial’s mind. The reason for that has been crypto’s volatility. Investors watched Bitcoin surge with surprise and even disbelief. The cryptocurrency is currently trading at almost $20,000.

But before you jump into the world of trading cryptocurrencies, it is essential to learn:

  • What’s behind them?
  • How they came to exist?
  • Why trade cryptocurrencies?
  • What makes them so desirable to investors?

What is a cryptocurrency?

First things first, let us define what’s a cryptocurrency. It is a digital asset whose purpose is to act just like normal money. It is a medium of exchange. Cryptocurrencies use cryptography to store records of data in a ledger, which is a computerized database.

Every cryptocurrency works through distributed ledger technology, and most are decentralized. A central authority does not govern cryptocurrencies; this makes them decentralized. The very first cryptocurrency was Bitcoin, which was born in 2009.

The History of Cryptocurrencies

The idea of cryptocurrencies first emerged in 1983. Cryptographer David Chaum first conceived the idea of electronic money called ecash. In 1995 he implemented his vision through Digicash, which needed user software to withdraw notes from a bank and a specific encrypted key sent to the recipient.

As we mentioned before, Bitcoin was the very first cryptocurrency to emerge into the world. The domain name ‘bitcoin.org’ was registered on 18th August 2008. An anonymous individual or group released a whitepaper titled Bitcoin: A Peer-to-Peer Electronic Cash System on the 31st October 2008. Nakamoto implemented Bitcoin’s software to be open-source and released it in January 2009. Nakamoto kept his identity anonymous.

The very first receiver of a bitcoin transaction was Hunk Finney. He downloaded the software and got ten bitcoins from Nakomoto. Programmer Laszlo Hanyecz executed the first commercial transaction with bitcoin; he bought two Papa John’s pizzas for ₿10,000. Today those two pizzas would be worth $150 million.

Analysts assume that Nakamoto himself mined at least one million bitcoins before he disappeared in 2010. Before disappearing, he handed his network key to Gavin Andreson, who later become the lead developer at the Bitcoin Foundation.

Stay tuned for our next bit on cryptocurrencies, where we go into more detail on trading!

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.42% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The materials contained on this page are for advertising and marketing purposes only and should not in any way be construed, either explicitly or implicitly, directly or indirectly. as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. You should make sure that you have sufficient time to manage your investments on an active basis. CDF are derivative financial instruments, which price is derived from the price of the underlying asset or contract to which the CFD refers (for example currencies, commodities, indices, equity, etc.). Derivative financial instruments and related markets can be highly volatile. The prices of CFDs and underlying instrument may fluctuate rapidly over wide ranges and may reflect unforeseeable events or changes in conditions, none of which can be controlled by the client or eBrókerház Befektetési Szolgáltató Zrt. Prices quoted or information may vary and change depending on market conditions. When investing in Company’s Products denominated in a currency other than that of the state in which you reside, the return may increase or decrease as a result of currency fluctuations. Any indication of past performance or simulated past performance included in an advertisement is not a reliable indicator of future results. All names, pictures and personal details of people depicted as traders in advertisements concerning past performance are included for presentation purposes only, and are not the actual traders who have made the transaction detailed in the advertisement (actual details are kept for privacy purposes). All opinions expressed by traders are not actual testimonials but rather are depictive of the actual past performance and trading experience. Any trades depicted are selected from past real successful trades and are not reliable indicator of all customers past or future trades.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.42% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. X