Bitcoin has been running a fast-paced rally since 2012, and even setbacks caused by hacker attacks did not change that. Whoever bought a few hundred Bitcoins a few years ago is now a multi-millionaire. But how do you get hold of bitcoins and where can you trade them?
“Some analysts predict that the price of bitcoin will rise to $500,000.”
Bitcoins have performed well in recent years. In 2016 alone, the Bitcoin share price rose by more than 126 percent. In 2017, the bitcoin reached new highs of over $7,000 and some analysts predict that the price of bitcoin will rise to $500,000. Others, on the other hand, call bitcoins “full of hot air” and believe that they are actually worthless.
Ultimately, however, the price of bitcoins is regulated by supply and demand. And the demand for anonymous money such as bitcoin is constantly increasing. The reasons for this were, for example, the capital movement controls in China, which can be circumvented with the help of cryptographic money, the purchase of illegal goods in the Darknet, which is often handled by Bitcoin, and simply the investment in Bitcoin as speculation.
An increasing number of investors shows a growing interest in the cryptocurrency. There are several ways to trade Bitcoins. The pros and cons of the various methods are explained here.
The easy way: Bitcoin as CFD
Traders who are primarily interested to get involved in Bitcoin’s price performance can trade bitcoins relatively easily through a CFD broker. A Bitcoin CFD can be imagined as a security. You participate directly in the volatility of the Bitcoin price, but you don’t own the Bitcoin physically.
For very speculative investors, a leverage of up to 30 can be used with a Bitcoin CFD. The CFD then climbs or falls 30 times as much as the original bitcoin. Thus, the higher the leverage, the higher the risk. A 1:1 participation is of course also possible. If you would like to trade Bitcoins as a CFD, you can use Plus500, for example. Of course, you can also use any other CFD broker of your choice.
Trade genuine Bitcoin
If anonymity is also important in addition to performance, there is nothing better than genuine bitcoins. If you have decided to trade real Bitcoins, owning a wallet is a basic requirement. This electronic wallet is similar to a bank account, as it can be used to make transfers and receive bitcoins. The transfer of bitcoins does not differ from a bank transfer, but instead of an account number, it is referred to as a receiving address. However, because the digital currency is sent directly from person to person without an intermediary, the fees are lower than for banks.
When Bitcoins are purchased on several portals, all Bitcoins can be combined in a digital wallet. A Bitcoin wallet on your smartphone is suitable for everyday use, but you can also use it for online payments on the PC or tablet. After downloading and installing a Bitcoin wallet, it should be protected with a strong password, a so called passphrase. This access code must then be provided before each transaction.
If you want to trade bitcoins, you can do this online on a so called cryptocurrency exchange. Bitcoin exchanges with a good reputation are Coinbase, Bitstamp, Kraken and Cex.io. The price you pay is influenced by supply and demand, which usually results in a fair market price. The traditional currencies Dollar or Euro can be easily exchanged for Bitcoins. You only have to specify how many coins are to be bought or sold at which price.
If the exchange finds a suitable offer, it trades the Bitcoins on behalf of the customer and then credits them to the customer. The purchase price for the acquired Bitcoins will be debited from your bank or credit card account. On CEX.IO, processing is particularly easy, especially since credit cards such as VISA and MasterCard are also available as payment methods.
Cryptocurrency Trading Platforms
Trading platforms are the alternative way to trade Bitcoins and other cryptocurrencies such as Ethereum. Among the best-known trading platforms are CEX.IO, Kraken, and Bitfinex. Users trade Bitcoin directly with each other, so prices on the various trading platforms can vary widely. On trading platforms such as Bitfinex the registered users post their offers to trade or sell bitcoins in a different currency.
Traders can see how many Bitcoins a seller offers at what price. A transaction is concluded as soon as an offer is accepted by another user. The purchase price for the acquired Bitcoins will be transferred to the seller’s trading wallet. Depending on the exchange, the operators charge a small fee for every trade made through the platform.
Bitcoin on the Stock Exchange
If you don’t want to spend the effort of opening an account at a Bitcoin exchange, you can also trade Bitcoin participation certificates on some stock exchanges. All you need is a securities account. However, you do not trade “real” bitcoins, but so called derivatives. The certificates replicate the performance of bitcoin.
It’s only a matter of time before Wall Street steps in. This will have a giant impact on Bitcoin.
It’s only a matter of time before Wall Street steps in. This will have a huge positive impact on Bitcoin. Trading house CME recently announced to introduce futures for the digital currency. After the news was made public, the bitcoin price passed the 7,000 dollar mark, the highest in its history. Bitcoin futures allow you to speculate on value increases and decreases by trading at future prices.
Trade Bitcoins Locally
Bitcoins do not necessarily have to be purchased via the Internet. There are several ways to purchase the cryptocurrency offline for cash. The cheapest and fastest way to trade Bitcoins is to trade it from a private individual. Various platforms, such as LocalBitcoins.com, arrange private meetings with retailers in the area. Caution: Please note that trading is very anonymous and unregulated.
Bitcoin ATM machines offer further exchange points, where you can trade Bitcoins locally. Depending on the manufacturer, the use of the machine differs in detail, but the principle is similar: The machine is fed with cash, after which the wallet is scanned to store the Bitcoins on your smartphone.