How Much Money Can You Make Trading Bitcoin — Learning from history
Every investor aims to make profits on their investments and the Bitcoin market has proved time and again its profitability.Cryptocurrencies are digital currencies brought about by the latest technology called the blockchain to redefine the concept of currencies in providing transparent and straightforward transactions.
The chief of these cryptocurrencies is Bitcoin. Bitcoin exists for several reasons. Bitcoin can be regarded as a means of exchange, a digital asset, a store of value, etc. All of these identifications are all related to the financial implications of Bitcoin.
Having a market dominance of 45.1%, the market cap of Bitcoin as at 22nd July 22, 2018 is $127,706,952,693 with a corresponding value of $7,441. Being the leading cryptocurrency, there are several ways through which money can be made with Bitcoin which includes Cryptocurrency trading, Cryptocurrency mining.
This article brings to light the different ways through which money can be made in the Bitcoin space.
Cryptocurrency trading can be defined as a market function in which cryptocurrency traders meet together on a trading platform to exchange cryptocurrencies with other valuables.
Cryptocurrencies can be exchanged against other cryptocurrencies or against fiat currencies. The platforms upon which these markets operate are called exchanges.
There are several verified cryptocurrencies in the cryptocurrency space e.g. Ethereum, Cardano, Litecoin, Waves, etc.
A cryptocurrency that helps to value cryptocurrencies against fiat currencies is called USD Tether (USDT). Cryptocurrency trading has a lot of resemblance with stock trading.
As identified in the previous section that the platforms upon which cryptocurrency trading occurs are called exchanges, it is essential to know a few things about them.
Exchanges as of present are unregulated platforms, thus, transactions are done on them by trust.
Exchanges differ from each other in terms of the services they offer. Some services offer cryptocurrency trading features between Bitcoin, Ethereum, and Litecoin only. Others offer between cryptocurrencies only and other is set up to bridge the bridge between cryptocurrencies and fiat currencies, e.g. LocalBitcoins etc.
Exchanges are third parties when it comes to transactions and keeping tokens in their purse should involve security consideration on the part of the investor.
There are quite a few cryptocurrency exchanges around that have gained the trust of traders, e.g. Bittrex, Binance, Poloniex, CoinExchange, etc. Below are the few steps to take before starting cryptocurrency trading.
The first step is to create a wallet. There are two types of wallet options namely hot and cold storage. However, due to the fact that trading is done via the internet, hot storage such as blockchain.info, Bitwala, paxful, Coinbase are good options for storing cryptocurrency tokens.
The second step is to create a trading account on an exchange of choice. Some trade is now employing KYC process to help in easy identification of fund owners. Thus, when you’re done with all these processes, you can send your tokens from your wallet to the exchange getting ready for trading.
For easy and efficient trading, learn a few ropes about the fundamentals of trading via research, the study of toolkits such as Coingy for Technical Analysis, etc. The next section identifies a few things to do for efficient trading.
FEW THINGS TO NOTE BEFORE CARRYING OUT CRYPTOCURRENCY TRADING
Cryptocurrency trading is a system that requires knowledge to function well. So, to trade efficiently, the following advice would be of great help.
Depending on your trading strategy if its long term or short term, carry out adequate research on the coin you’re investing in. You can check www.coinmarketcap.com to get details about every token. Also, follow their social media channels to get up to date information with their projects. Also, follow their forum on www.bitcointalk.org to hear the perception of the community as they communicate with the developers. Lastly, read up coin reviews on several reviews websites about the tokens.
“Buy the Rumour, sell the news” is a strong quote in stock trading. In like manner, many traders have classified Bitcoin as a digital asset, and this quote fits into its trading. This quote identifies the trader’s psychology in that when a rumor starts going around, it’s time to take a position and then once the news gets confirmed, you take a position to sell.
To get updates on several cryptocurrency projects, www.coinmarketcal.com is the website to go as it has a compilation of hundreds of cryptocurrency news.
Technical analysis teaches the crypto trader to make use of several analysis such as Japanese candlesticks, Stochastics, Fibonacci levels, MACD etc. To learn how to carry how proper technical analysis, you can subscribe to Coingy or TradingView and purchase their toolkit for learning.
WHAT IS CRYPTOCURRENCY MINING?
Cryptomining is a very lucrative adventure in the cryptocurrency space. To understand crypto mining, there is the need to understand the blockchain. Thus, the blockchain can be defined as a ledger on which every transaction within a cryptocurrency network is recorded and made available for public view.
Thus, when a trader sends token via his address to another wallet address, the third party in place is not a human but rather a protocol put in place.
However, even though this protocol that supervises transaction isn’t human, humans are put in charge of verifying and processing transactions.
The process whereby transactions are confirmed and treated is called crypto mining. This involves the solving of mathematical cryptographic problems involving the transaction data.
Investors can profit from this adventure by setting up mining farms or investing in a mining pool.
Mining cryptocurrencies are very safe to engage in. The technicalities are just one of the few challenging things.
These technicalities involve the procedures involved such as getting a mining software package, joining a mining pool, mining farm structure, custom-made computer with good GPU, mining ASIC chip, etc.
However, regardless of the stress, cryptocurrency mining remains one of the top ways to make money, this statistical data has shown over time (check www.blockchain.info).
Every day, there are millions of transactions carried out on the blockchain with different transaction fees attached to them.
OTHER WAYS TO MAKE MONEY IN THE CRYPTOCURRENCY SPACE
It is important to know that although this article covers detailedly just two ways in which money can be made through Bitcoin trading.
There are others ways also in which money can be made in this space. Outlined below are a few amongst many others;
Buying & Selling: Similar to the stocks market where stocks are valued at different prices against each other, Bitcoin can be exchanged for fiat for profits. Also, due to the fact that Bitcoin can be used as a means of exchange, companies and firms can also receive Bitcoin for their goods and services.
Initial Coin Offering: Widely known for its short-term ICO, initial coin offerings are projects run by cryptocurrency startups as a fundraising project for all the outlined plans in their roadmap.