BEHIND THE DIGITAL CURRENCY
CURRENCY EXCHANGE
TRADING PLATFORMS
previous arrow
next arrow
Slider

Crypto CFDs are Trending, But Are They the Right Investment Options for Newbies?

0 Comments

The prices of bitcoin (BTC) in recent days are on a downward trend, as the $63K + price recorded last April 16, 2021 has dropped to $55K + as of April 20. Actually, this is the kind of price trend that has been keeping the financial derivative markets bustling for several months now. CFDs or Contracts for Difference (CFDs) trading platforms for one have been alive with crypto CFD trading, since the younger generation of investors consider it as a more affordable and less risky type of investing in cryptocurrencies.

Although only a few countries allow CFD trading as a legit financial activity, those that do so like the UK, Germany, Italy, Cyprus and Spain, impose regulatory laws and policies on CFD trading platforms and brokers. Still, even non-citizens of these countries participate since CFD trading takes place online. While the reason why there has been growing interest in CFD trading is because many are taking gains. However, many newbies have been floundering, while others have found little success.

What Makes CFD Trading Look Promising to Young Investors?

CFD brokers provide customers with a social trading platform. That way, newbies and those who find it difficult to grasp the meaning of terminologies commonly used in CFD trading, can engage by just copying the trading positions of peers and expert traders.

Now here’s the thing, while the blockchain technology supporting cryptocurrencies is already complex and hard to understand for many, participating in CFDs for bitcoins can be twice as difficult. Contracts for Difference mainly involve price speculations, and is a cheaper form of investment because one does not need to buy the asset covered by the contract. All that a CFD trader has to do is to buy a contract supporting one’s price prediction of whether the price will go up or down.

What Newbie CFD Traders Need to Understand about CFD Trading?

According to Yahoo finance, crypto trading platforms report that recent buying activities are coming mostly from retail investors, consuming the BTCs being unloaded by institutional investors. Now why is the price of BTCs going down? It denotes that there’s a large supply of BTCs in the market but only a few are buying. Since buyers are mostly retail investors, the demand is not as great. The related price forecast therefore is that BTC prices will continue to go down if the market behavior does not change.

CFD brokers offer trading positions, of whether the price of an asset like bitcoin will go up or down, when paired with the value of another asset, usually the US dollar. If a CFD trader bought a contract that matches the outcome after the lapse of a specific period, the trader gets to collect a certain percentage of the price difference between the BTC and the USD. If otherwise, the trader pays rather than gain from the price difference.

However, this is only part of what a newbie trader needs to understand about Crypto-CFD trading, as certain factors depend on what the CFD broker stipulates as terms of each CFD contract. That is one of the reasons why some CFD traders make comparisons among CFD brokers when engaging in this type of investment trading.

In most cases, they checkout reviews of analysts on CFD brokers in order to find out not only about offers and requirements but also about the integrity of the broker. AskTraders’ analysts for one published a comprehensive review of CFD broker Tradeo, which revealed that this broker is licensed by the government of Cyprus but it does not hold a licence issued by UK’s FCA.

Although Tradeo’s Cyprus license provides protection of up to $20K to customers in case of broker default, the lack of FCA license will not entitle Tradeo’s UK customers to the same protection mandated under the UK laws. Moreover, the AskTraders review took note that tradeo.com reviews posted by customers at Trustpilot and Forex Peace Army, mentioned issues pertaining to the broker’s inadequate customer service, hidden account charges and pushy sales people.

Such information are likewise critical to one’s CFD trading experience, which newbie CFD traders must consider before making hefty financial decisions in relation to CFD trading.

What is a Cryptocurrency Wallet?

0 Comments

Cryptocurrency Wallet is a digital tool you can use to interact with the block chain network. Crypto wallets store cryptocurrencies. They work as a gateway that provides the tools a user needs to communicate with the block chain. It has a private key associated with it.  As a user always keep the private key safe. These wallets can generate all the information we need to use cryptocurrencies. These allows you to take control of your cryptocurrencies.

The various types of wallets can be divided into three main groups. All these wallets can also be referred as Hot or Cold wallets.

3 main groups.

  1. Software Wallet. You can avail this wallet in 3 forms: online, mobile and desktop. The currency are found and stored as a software on a device.
  2. Hardware Wallet. This enables you to store your cryptocurrencies in a physical device which looks like a USB drive. It stores your private keys and do not expose them to the outside world. It provides defense against cyber hacks, fishing scams and key loggers.
  3. Paper Wallet. It is a hardcopy or a printed piece of paper. It will have keys and QR codes that will be used in any cryptocurrency transaction. The information cannot be found in the Internet thus many find this option safer.

What is Decentralized Finance

0 Comments

This is commonly known as DeFi. It is known that cryptocurrencies are digital assets that are not controlled by any banks or government. These digital tokens can be transferred or sent to anyone from anyone in all corners of the globe without the need of a bank or any financial institute. Cryptocurrencies are decentralized money. Compared to the paper currency that we currently used, these are centralized currencies which rely on a central authority. Decentralized finance aims to replace our current financial system.

DeFi is a term used to define financial services with no central authority. The use of decentralized money like certain cryptocurrencies that can be programmed for automated activity can lead to the building of exchanges, lending services, insurance companies and other organizations that don’t have any owner and are not controlled by anyone.

What are the risks of DeFi:

  • Still in its infancy stage.
  • Use cautiously with a small amount of money.
  • Some services are only partially centralized.
  • Intensive research is needed before attempting to avail of any services you want to invest in.

Important Things to Consider Before Investing in Cryptocurrencies

0 Comments

Before you start investing in these digital assets there are some important things to note and remember.

  • Cryptocurrencies are very unstable. They can go very high and go down very fast. With the blink of an eye, its current value can abruptly drop. There are many risks involve and its to risky because you can loose all your hard earned money. It’s safer not to gamble your financial security. Think twice before investing.
  • The use of cryptocurrency has to pass through a needle’s hole before being accepted by the public. It should be built in shared trust and reliability. Do a survey and only a small percentage knows about this digital currencies.
  • These currencies can be used illegally. This is the ideal medium used by many criminals, terrorists and hackers.
  • Trading and investing in cryptocurrency is a gamble. You can exchange its used without any regulation. It’s credibility has yet to be established.

Will Banks Embrace The Use of Cryptocurrencies?

0 Comments

During this digital age, we are hearing more about cryptocurrencies. The public has been skeptical about this and are asking its effect on banks. The question being raised now is will banks accept or adopt its use? Will they also venture in creating its own  cryptocurrencies? If yes, how will this affect its clients.

Before moving forward, we should define cryptocurrencies first. Cryptocurrencies are digital currency that has no physical form. They are being used mostly in the web and are kept electronically via the blockchain. For its security, it uses an encryption technology to authenticate the movement of funds. With it’s increase and introduction to the web some Treasuries are considering to make a further research and study about this digital currencies. This would help them determine its role in the financial world and in a bigger picture, the economy.