What is a Cryptocurrency?
Cryptocurrencies are web-based digital currencies that use cryptography to secure the financial transactions. A feature of cryptocurrencies, is that they are generally not issued by any central authority, which renders them “immune” to manipulation or interference by governments.
Bitcoin, which was first released as an open-source software in 2009, and was not originally supposed to be made a currency, is generally considered the first decentralized cryptocurrency, and has remained the most popular and well-known cryptocurrency even today, although there are thousands of different currencies.
The cryptocurrency market is growing rapidly by the day, but compared to the global currency market it is still small. This is a factor that can be attractive to traders who want to feel in the forefront of trading in these new markets. An important factor to remember is the risks associated with trading in this new and volatile markets, and an importance of understanding that losses can come just as fast as profits or even quicker.
Cryptocurrency trading, is simply the exchange of one cryptocurrency for another currency. As in Forex trading, you can buy and sell one cryptocurrency for another, like Bitcoin or Ripple for USD and Euro.
The crypto markets move depending on supply and demand, however, as they are not centralised, they remain free from many of the political and economic concerns that can affect regular global currencies.
- Market capitalisation: the value of all the coins in existence and how they are perceived by users.
- Supply: the number of coins and rate at which they are released, destroyed or lost.
- Major events: regulatory updates, security breaches and economic setbacks.
- Integration: the ease and extent to which the cryptocurrency integrates into existing infrastructures like e-commerce payment systems.
Cryptocurrency CFD are derivatives, enabling you to speculate on the price movement of a cryptocurrency without taking ownership of the underlying coins. You can buy if you think a cryptocurrency will rise in value, or sell if you think it will fall.
Check out the full list of cryptocurrencies on CFDs to choose from on the Invest505 platform.