What is Bitcoin Trading?

What is Bitcoin Trading?

Bitcoin trading is essentially the transaction of converting one cryptocurrency for another cryptocurrency. There are digital marketplaces where crypto traders can buy and sell Bitcoins by using different traditional fiat currencies or other cryptocurrencies. Many people believe that trading in Bitcoin and cryptocurrencies can be a risky venture so it is important to proceed with caution. To help you get up to speed on Bitcoin trading here is a quick guide which covers the basics.

How does Bitcoin Work?

Firstly before trading Bitcoin, you need to know how it works. Bitcoin is a digital currency created in 2009 and is entirely virtual, it has no physical aspect. There are exactly 21 million Bitcoin (BTC) available in total and Bitcoins are released into the public through the process referred to as mining. It’s important to note here that there are a few different versions of Bitcoin (BTC), such as Bitcoin Cash (BCH) and other lesser known ones. But the true coin is BTC and that’s Bitcoin Core and the original Bitcoin.

Why Trade Bitcoin?

  • Bitcoin is Global - Bitcoin is recognised as a currency in some countries. However, the price of Bitcoin isn’t necessarily directly linked to the economy or policies of any single country. Bitcoin’s price has however been affected by a variety of events, from China’s devaluation of the Yuan to the Greek capital controls. The historic price of BTC has increased since the beginning and this could have been because of a number of different reasons, including speculation.
  • Bitcoin Trades 24/7 - There are no official Bitcoin exchanges, unlike stock markets. However, instead, there are hundreds of crypto exchanges across the world that function 24 hours a day, 7 days a week. Since there is no official Bitcoin exchange, there isn’t an official Bitcoin price either. This has led to arbitrage opportunities as some exchanges and some countries offer the buy and sell price of BTC much higher than others.
  • Bitcoin is Volatile - Bitcoin is commonly known for its rapid price movements. Bitcoin’s volatility can create exciting opportunities for traders, however, most people claim that you should proceed with caution when trading with Bitcoin’s volatility and has left many day traders hating life.

How Bitcoin Exchanges Work

You can say that Bitcoin exchanges are similar to physical currency exchanges. Since you are essentially just buying one currency with another. The value of Bitcoin doesn’t come from an industrial economic base but from the work performed by your computer, meaning it can be traded like a commodity. On the other hand, exchanges like Digital Surge act as a go-between for currency transaction, converting wealth from Bitcoin to the national currency.

How to Become a Trader in the Bitcoin Market

There is a number of ways to become a player in the Bitcoin market, they all have their own strength and weaknesses. The quickest way to become a trader is to go straight into the markets through crypto exchanges. We cover the best crypto exchanges for Australian traders in our other guide.

Trading Bitcoin using a reputable and reliable Bitcoin exchanges operating lawfully (similar to a foreign exchange), where cryptocurrencies from all over the globe are traded 24 hours a day, 7 days a week. Before trading Bitcoin or any cryptocurrencies it’s important to know the risks and have at least a basic understanding of cryptocurrencies and crypto trading techniques to protect yourself against losing coins.

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About the Author

Sam Deering

Sam Deering

Sam is a blockchain and cryptocurrency enthusiast, crypto trader, web developer, entrepreneur and also the founder of Crypto News Australia.