Unlike fiat currencies, cryptocurrency is a digital currency that exists only in the virtual network; it is encrypted, which makes it almost impossible to duplicate or manipulate.
It should be noted that digital currencies are not regulated by a particular country or region. In other words, no government or central authority supports these currencies. Virtual money moves in a decentralized network using Blockchain technology, allowing all digital ledgers and records to be shared and distributed to all computers within the system. That is to say, almost anyone can take review and track all the financial transactions happening on the network.
So, does this mean anyone can see who is buying or selling whatever?
The answer is no. One of the best features of cryptocurrencies is their pseudonym-anonymity. Even though you can see all past transactions, you cannot see who is behind those transactions. Moreover, all financial transactions are restricted to their private keys or virtual "addresses," which are highly protected and impossible to track.
Blockchain technology makes cryptocurrencies independent of any political or central authorities in terms of control. These currencies are virtually immune to any government interference or manipulation, which explains their rapid growth over the past decade.
The most popular cryptocurrencies are Bitcoin, LiteCoin, Ethereum, Bitcoin Cash, and Ripple.
Even though there are now more than 2000 types of digital currencies in the world, Bitcoin is still considered the most popular, and valuable among the rest. There are now 17 million bitcoins in circulation all over the world (estimated at more than 154 billion USD) and the number keeps growing to reach 21 million coins.
In 2009, an individual by the name of Satoshi Nakamoto, whose real identity is still unknown, introduced bitcoin to the world. In 2010, he used Bitcoin for the first time in conducting a real financial transaction in Jacksonville, Florida, to buy two pizzas for 10,000 BTC. At today's price, the bids are worth more than $90,000. Bitcoin is proof that cryptocurrencies can be as valuable as fiat money or other financial assets; this has led to the emergence of other cryptocurrencies in the market.
Although Bitcoin is still not officially accepted as a legal currency, many markets accept it as one of their payment options. Shopify, for example, has integrated BitPay into its marketplace. This enables all Shopify customers to make payments using Bitcoin as long as they have an active BitPay account with sufficient balance.
Bitcoin is considered a valuable financial asset for trading and investing due to its potentially high value. Bitcoin and other cryptocurrencies, such as LiteCoin, Ethereum, Bitcoin Cash, and Ripple are attractive and lucrative options for investing.
There are many ways to invest in cryptocurrencies including traditional methods. For that, you need to open a special wallet in the market or trading center and buy a certain sum of bitcoins or other digital currencies. Then, when the price goes up, you make a profit by selling the bitcoins you bought.
But this method is pretty limited and creates its own set of problems, such as requiring a ton of starter money. Cryptocurrencies, like other financial assets, are often traded against the US dollar. For example, the price of 1 Bitcoin is now approximately 16000 USD; therefore, you need this sum of money to buy 1 Bitcoin.
If this does not seem like a viable option, you can always opt for cryptocurrency forex trading – by predicting the price movements of cryptocurrencies without even owning the coins. You can go long (buy) when you think the price is going up, or go short (sell) when you predict the price is going down. This method is known as forex CFD trading in the FX market.
In addition, you don’t need to spend a lot of money using this method because you can start trading with 0.01 lot. One standard lot in cryptocurrency trading is equal to a whole coin, so 0.01 lot means you only need 160 USD (give or take) to start trading.
You can also take advantage of various leverage services offered by forex companies. This allows you to trade with a larger volume than your available capital. Of course, you should know that leverage trading has its own set of risks.
Forex cryptocurrency trading is available on the MetaTrader 4 platform with several currency pair options, such as:
BTCUSD (Bitcoin / US Dollar)
ETHUSD (Ethereum / US Dollar)
LTCUSD (Litecoin / US Dollar)
XRPUSD (Ripple / US Dollar)
DASHUSD (Dash vs US Dollar)
EOSUSD (EOS / US Dollar)
and many more!
The cryptocurrency market moves differently in terms of volatility compared to the fiat currency market. Even though cryptocurrencies move regardless of political or economic situations, they are nonetheless affected by the following factors:
1. Supply and Demand
Cryptocurrencies circulate within certain limits. For example, the Bitcoin supply depends on the miners. Bitcoin is currently "mined" by processing transactions, which in turn generate portions of new coins as a reward for miners.
The growth rate of new coins decreased a lot from 6.9% in 2016 to 4% in 2018, which created a high demand for this financial asset and thereby pushed up the prices.
On top of that, Bitcoin is expected to reach a certain limit, i.e., 21 million coins. Therefore, when this number is achieved, there will be no more coins available for mining. The limited supply of coins, the high demand, and other aspects will determine the market price of the cryptocurrency.
2. The Media Coverage of It
Cryptocurrencies are the-in-thing now because they’re a new and virtual asset. So the way they are presented to the public by the media will definitely affect their value.
The more cryptocurrencies are covered by the media, the more valuable they become. For this reason, even a single tweet of a rumor or misinformation can throw the entire cryptocurrency pricing system into disarray.
3. Market Integration
The availability of cryptocurrencies as a viable payment option can also affect the price movement of these currencies. Currently, many places like Shopify, Microsoft, Bitrefill, Purse.io, Amazon, and Twitter accept cryptocurrencies as a method of payment, especially Bitcoin. These markets invite more users to buy and invest in Bitcoin, which in turn increases its market value.
4. Regulations and Legal Issues
Since cryptocurrencies are completely new with fewer regulations, people can invest or trade in them very easily. However, this can create other issues such as money laundering and criminal activities, and therefore, make it a not-so-certain choice for public use.
Cryptocurrencies can also be classified into different categories. While the SEC classifies cryptocurrencies as securities, the CFTC believes cryptocurrencies are commodities. These rating systems will also determine the value of cryptocurrencies in the market.
The aforementioned factors should be taken into account if you ever want to invest or trade in cryptocurrencies. Your days will be filled with adrenaline rush because the price of cryptocurrencies fluctuates easily and rapidly. It can ascend to the sky today and descend to the depths of the earth tomorrow.
