Cryptocurrency has been growing over the past few years and it’s slowly becoming one of the most popular forms of trading in the US. With the likes of Bitcoin, Ethereum and Ripple taking over in the digital payment world, this is an asset on the rise.
In order to completely understand cryptocurrency trading,you might well need to spend lots of time reading up and researching the vagaries of the market, especially if you’re used to traditional assets.
As it stands, cryptocurrency is one of the most active trade markets in the world, but it needs to be watched. For example, at the moment, one bitcoin was worth more than $7,500 on December 22, having been a little over $6,600 on December 17. For investors, volatility presents both a risk and an opportunity – and therein lies its appeal. If prices jump up or down sharply, a savvy trader can cash in. It’s like a forex (FX) market but more extreme.
Although cryptocurrencies can be spoken of as one amorphous blob, it’s important to consider the differences between the different payment methods. Bitcoin is clearly the most prominent cryptocurrency – and the most mainstream – with Ethereum and Ripple following closely behind.
ShoutOutUK notes how Bitcoin started modestly in 2008. However, in 2011, it achieved parity with the US Dollar and it then took off in 2017 – at one point reaching an unsustainable $20,000 and drawing parallels with ‘Tulipmania’ in the past. The price is still volatile now – with a surge in the summer of 2019 showing that there’s still much hype around Bitcoin – and value top be had for traders as it rises and falls.
TheNextWeb notes that cryptocurrencies in general have started to become more mainstream, and as a result, are only likely to grow. Bitcoin first gained traction from being the first digital currency of its kind with no restrictions (or central bank control) surrounding it. That explains its position in the market and why some people may even see the terms ‘cryptocurrency’ and ‘Bitcoin’ as interchangeable in the way that ‘Hoover’ and ‘vacuum cleaner’ might be used.
There is no true way to understand where cryptocurrencies could end up – but the key will be in determining their place in society. While they might carry the moniker ‘currency’, it’s not yet clear that this is a currency in the traditional sense. Policymakers will need to wrestle with how much – if any – control they can have over such currencies. Regulation on a mass scale could still limit their appeal and cause price falls. Yet if governments accept them as payment methods – and their use extends further still – then they could revolutionise the way the world sends, spends and saves money.
The only certainty with cryptocurrency is that its story is yet to be determined. As political leaders, investors, traders, businesses and consumers ponder their approach, there will be twists and turns ahead. It’s those twists and turns that make this an asset to watch – and present an opportunity as well as a risk.