Cryptocurrencies

Cryptocurrencies carry a high value, and this has made them legitimate financial assets that can be bought and sold for profit. Based on this, cryptocurrency trading is the buying and selling of various coins or tokens with the aim of generating a profit. Investors can trade various cryptocurrencies via a crypto exchange or a CFD brokerage firm, such as AvaTrade.

When you trade via an exchange, you will need to create an exchange account as well as open a crypto wallet.

With an exchange, you own actual coins in digital form and must store them securely. You will generate a profit when the value of the underlying coin you are holding increases. You  then sell the coins at a higher price than that which you had initially bought for. If you sell at a price lower than the buying price, you incur losses.

In contrast, with a CFD brokerage firm, you do not own the underlying coin or token – you simply speculate on its price changes.

If you place a buy order, you generate profits if you exit the trade position at a higher price. You incur losses when trading crypto CFDs if your price prediction is wrong.

CFDs offer a lucrative way of trading the volatile cryptocurrency market, and investors can also benefit from leveraged trading.

At AvaTrade, they offer you the chance to trade a selection of leading cryptocurrencies. This means you can speculate on whether you believe the price will rise or fall. When you trade with them, you can take advantage of some of the industry’s leading crypto conditions, including low spreads.

What Cryptocurrency Miners do

They do this by confirming transactions on the blockchain or the public ledger. This means that mining is simply the process of verifying crypto transactions.

People around the world transfer cryptocurrencies from wallet to wallet, with miners using computer-processing power to confirm and add the transactions on the public ledger.

Once a transaction has been completed and recorded on the blockchain. It cannot be reversed. Miners receive new coins as their compensation- and new cryptocurrencies are generated.

Similar to physical gold, most cryptocurrencies, such as Bitcoin, have a supply limit. last coin will be mined in 2140.

By capping supply, demand will be the primary determinant of the price. Bitcoin was the first-ever cryptocurrency in the world, and it continues to be the most popular and influential cryptocurrency as of January 2021 which has seen some high gains..

Nevertheless, numerous blockchain projects have created many cryptocurrencies. Which have grown both in terms of adoption and circulation. Some of the notable cryptocurrencies that have emerged over the years include Ethereum, Ripple, Litecoin NEO, EOS, Stellar Lumens and a number of derived currencies, including Bitcoin Cash and Bitcoin Gold.

What is a Blockchain

Blockchain is an open digital distributed ledger that publicly holds records in a manner that is secure, transparent, and decentralised. It is essentially a public database that is not controlled by one single entity. A blockchain is made up of several ‘blocks’, which are lists of transaction records that are linked to each other and they are encrypted.

Each block contains:

• 1.The details of the sender, receiver and amount of e-coins.
• 2.A hash, which serves as a unique fingerprint.
• 3.A hash of the previous block in the chain.

What is a Cryptocurrency Wallet?

A wallet is a piece of software or hardware that gives you the ability to store and exchange your cryptocurrencies. Think of a crypto wallet as a ‘crypto bank account’ that helps you to keep your coins or tokens.

In most cases, crypto wallets are coin specific: A Bitcoin wallet will only send and receive Bitcoins; an Ethereum wallet will only send and receive Ether coins.

Cryptocurrency wallets are encrypted. When you send funds, you broadcast an encrypted message to the recipient. Only the recipient’s cryptocurrency wallet can decrypt that message and thus receive the funds. Crypto wallets can either be hardware or software.

• Software wallets operate online and include mobile applications and wallets provided by crypto exchanges.
• Hardware wallets  (cold storage) and are offline storage . Hardware crypto wallets are considered to be more secure than their software alternatives as they cannot be hacked and are immune to viruses or malware. Furthermore, hardware wallets can store multiple cryptocurrencies.

Why Trade Crypto CFDs With AvaTrade?

• Uncompromised Safety – Enjoy maximum safety and security by trading with a reliable and trustworthy broker regulated in various jurisdictions around the globe.
• Numerous Cryptocurrencies – Choose from a wide selection of crypto coins and tokens to trade directly through our platforms. 
• No Hidden Fees – They offer zero commissions and no bank fees on transactions!
• Crypto Never Sleeps –Crypto markets never sleep, and neither does AvaTrade. We offer round-the-clock service and support in multiple languages.
• Generous Leverage – Get leverage of up to 2:1 (for EU residents) and 25:1 (for non-EU residents), and increase your trade value and exposure to the markets. Remember that leverage can also increase your risk.
• Limit Your Risk – Control your risks using stop loss and take profit orders available at AvaTrade. Other innovative orders such as buy/sell stop orders as well as buy/sell limit orders are also available to help you manage your risks when trading your preferred cryptocurrencies.
• Choice of Crypto Pairs – Trade crypto/crypto pairs as well as crypto/fiat pairs (USD, EUR, JPY, and more) and diversify your trading portfolio.

Bitcoin, Bitcoin Cash and Bitcoin Gold

Bitcoin has not only opened the gate for other coins and tokens. It continues to lead the cryptocurrency world with pride and authority. The cryptocurrency started with its value being worth only a few cents to the dollar, but by 2017, it had announced its place in the investment world when BTC value almost touched the $20,000 mark. After a brief period of retracement, it roared again and printed an all-time high of circa $41,000 in early 2021.

Bitcoin Cash (BCH) was created by the Bitcoin hard fork on August 1, 2017, resulting in a new version of the blockchain with different rules. BCH has a similar supply cap to Bitcoin at 21 million, but it was created to solve the concerns of scalability, transaction speeds, and block size, manifested by the latter coin. The BCH network is faster and can handle large transactions, but there were concerns that the larger block size was susceptible to security compromises. In late 2018, BCH experienced its own fork, which resulted in the creation of Bitcoin SV, whose proponents stated that they wanted to stay true to the original vision of Satoshi Nakamoto.

Bitcoin Gold (BTG) is the second fork from Bitcoin (i.e., the second version to stem from Bitcoin’s source code). BTG was created to solve the danger of centralised mining pools. Mining Bitcoin was increasingly becoming controlled by large players who could afford specialised computing equipment. The idea of BTG was to change the algorithm of Bitcoin mining such that miners with dedicated ASIC-based computers would have no advantage over miners with normal GPU processors. It was a bid to democratise mining all over again. Beyond the mining protocol, BTG developers have also continued to focus on addressing issues relating to distribution, security, and transparency of the wider cryptocurrency world.

Ethereum 

Ethereum (ETH) is more than just a cryptocurrency, it is also a decentralised blockchain platform that supports the development of decentralised applications, tokens, and smart contracts. It is the internet of blockchain. No cryptocurrency holds more promise than Ethereum, and this has been reflected in its price.

Although a young cryptocurrency, Ethereum quickly rose to above $1300 during the crypto boom of late 2017. It would succumb to the subsequent multi-year bear run and printed a low of just above $100 during the March 2020 coronavirus pandemic. But it has since recovered nicely and managed to print an all-time high of above $1,400 in January 2021.

Unlike Bitcoin though, Ethereum does not have a capped supply, but the pace of production of new coins will gradually decrease over time. The Ethereum platform opens the door to the application of wide and varied use cases of the blockchain technology, and this serves as a major positive fundamental of its underlying cryptocurrency.

Litecoin 

Litecoin (LTC) is one of the more veteran cryptocurrencies out there, and very much similar to Bitcoin in many of its characteristics. Which is designed to be the ‘lighter’ version of Bitcoin to enable faster peer to peer transactions. There are key differences though, in terms of speed and quantity. It takes Litecoin 2.5 minutes to create a block compared to the 10 minutes required with Bitcoin.

Litecoin is also 84 million caped compared to Bitcoin’s 21 million. Litecoin initially attracted miners because of how fast blocks are completed. The coin has failed to live up to expectations despite being an early entrant in the cryptocurrency scene.

Why are Cryptos Ideal for Trading?

Open a Trading Account at AvaTrade and start trading cryptocurrencies w