The digital currency was first introduced in 2009 by an unknown developer named Satoshi Nakamoto. Due to the various advantages, it soon became a hot topic for many and rose in value. Many altcoins came after Bitcoin, the most famous ones being Ethereum, Litecoin, Cardano, etc. We will list the critical benefits and characteristics of trading Bitcoin so that traders in South Africa can make better investment decisions.
Benefits of Bitcoin Trading
Let us list some of the vital benefits of bitcoin trading:
- Price movement. Volatility is the bread and butter for many traders. Bitcoin trading allows investors to capitalize on the never-ending price movements in both long and short directions.
- Transactions. With bitcoin, all the transactions are made public in the ledger, making it impossible for anyone to interfere and cheat.
- Transfers. Traders can choose to keep their cash in Bitcoin and send it to others at low costs. The transfers are fast and cheap. Bitcoin is becoming a mode of payment for many.
- Trading Hours. Unlike other markets prone to closing at certain hours, BTC is available to trade 24/7. Traders can trade it on weekends and weekdays.
Disadvantages of Bitcoin Trading
There are some demerits to trading bitcoin:
- Exposure to Hacks. Hackers can target Bitcoin exchanges which can result in a loss of funds.
- Regulation. Bitcoin does not come under government regulation as it is a decentralized currency.
Other than this, the price of bitcoin can fluctuate rapidly if a few groups of big sellers or buyers come in.
Where can South Africans trade Bitcoin?
There is a variety of brokers available for traders in South Africa. Investors can enjoy good liquidity and the lowest costs in trading. It is vital to sign up using your email and password. After that, traders have to provide their identity documents to verify their accounts.
Brokerages now list multiple methods to fund your portfolios. After making a suitable deposit, it is possible to start executing your trades. Demo accounts are also available for many traders that allow them to trade with no risk whatsoever.
Important Characteristics in Trading Bitcoin
Many features of trading cryptocurrencies or Bitcoin differ from other financial markets. Let’s cover a few below.
Bitcoin wallet is similar to your regular pocket, except it stores coins in a digital format. A specific key can be used to access it, which is under the owner’s knowledge. Traders can send or receive bitcoins using their wallets.
Mining is one of the most popular ways to earn passive income. This is done using appropriate hardware such as Graphics Processing Unit. The GPU is employed to solve a computational puzzle in the network. As a reward, the miner gets a portion of Bitcoin. Depending on your system, the mining profitability can increase or decrease. Before setting up a rig, investors have to calculate the electricity and hardware costs.
Bitcoin strategies generally involve technical analysis and algorithms, as fundamentals are rarely in focus. Arbitrage, grid, and price action trading is one of the favorite practices of investors.
Image 1. A Bitcoin trader uses technical analysis to predict the next potential drop. They plot the trend line on the four-hour chart and embrace to place a short for a risk-reward of 1:2. The final target is the previous rejection point.