Bitcoin CFD vs Bitcoin – Bitcoin CFD meaning

The first blockchain currency, Bitcoin, was launched in 2009 and was not received enthusiastically by most countries. It remained a passion for coders, mainly because it was challenging and not for profit motives. Traditional traders kept their distance from crypto because they found it non-profitable. However, Bitcoin saw a sudden appreciation in its value in 2017 and changed the game forever. Bitcoin prices rose from $400 in 2016 to $9000 in 2017. This upsurge made every investor, trader, broker, and even the skeptics give crypto due attention. 

Cryptocurrency is one of the most volatile instruments that you can legally trade. There are other cryptos as well, but like Litcoin, but Bitcoin is the most popular. It is a highly volatile asset, which makes it very attractive for risk-takers. If you want to be a part of the crypto trading entourage, you can do so by purchasing physical Bitcoins or Bitcoin CFDs.

What is Bitcoin CFD?
Bitcoin CFDs, or Bitcoin contracts for difference, are derivatives products that allow traders to trade on live market prices without owning the bitcoin instrument. Bitcoin cryptocurrency traders can own if they open a wallet that will act as a bank account, and through this wallet, traders can store, receive, or transfer Bitcoins.

If you want to trade Bitcoin as CFD, visit the broker’s page.

Buying Bitcoins in Physical Form

Bitcoin is a cryptocurrency, which means that it exists virtually. Then, how can someone buy physical bitcoins? Technically, you cannot buy bitcoins in physical form because that does not exist. However, we can tell you how you can store it to act like a real currency. First, you need to create a wallet that will act as a bank account but from the Bitcoin. Through this wallet, you can store, receive, or transfer Bitcoins at your discretion. This wallet can be installed on your mobile or a computer. You can even use a third-party application if the original app is not available in your country. To initiate the wallet, you will need a Bitcoin address and a private key that you can use to make the transactions. You can purchase Bitcoin online by paying a small fee.

Not everyone is comfortable with the concept of keeping a wallet, especially when a third-party platform is concerned. Traders who wish to take advantage of price fluctuations but do not want to buy the underlying asset refrain from keeping a wallet. They prefer CFDs.

Contract for Difference (CFDs)

A Contract for Difference, commonly referred to as a CFD, is a deal between a buyer and a seller. Here the underlying asset, Bitcoin in our case, is not bought. Both parties agree to pay in cash any price difference, on a future date, due to fluctuation in the asset’s price. Since it is a contract between two parties for a particular future date, it is called a contract for difference. If you can identify the trend, you can capitalize on it and pay the difference in the price value from the purchase date to the expiration date of the contract. If you cannot identify the trend, you will be paying the other party the same difference. 

Many traders prefer CFDs for various reasons, one of them being the lower commission that they will be paying in the form of spreads. This allows traders to gain from lower price movements, as well as they can open more interim positions. One of the biggest advantages of buying CFDs instead of physical bitcoins is that you are not required to make any large investment. Since a CFD is a contract in which only the difference is paid, you do not need to pay for the actual asset. Such privilege is not available with physical bitcoins. You will have to pay in full for the bitcoins that you want to hold in your wallet.

As we all know, cryptocurrencies are highly volatile; having the advantage of setting up take profit and stop-loss would be beneficial. It can save traders from suffering huge losses. Unfortunately, these features can be accessed by CFD traders.

Advantages of Bitcoin CFDs

Leverage is an important feature of any trading market as it allows you to operate securities or instruments of larger worth than your actual investment. For example, if your broker offers a 1:10 leverage and your actual investment is $500, you will get the opportunity to operate $5000 in the market. CFDs offer the same advantage. However, we would advise you to be careful while using leverage to increase the chances of both profits and losses equally. If you accurately speculate price trends, you will enjoy gains, but if your predictions are wrong, you can end up with more losses than your investment.

When you buy a physical currency, you can gain from it only when its price increases. For example, if you have bought gold to profit from it, it is possible only if its value increases. It is a similar problem with physical bitcoins, but you can work around it by investing in CFDs as you can open a sell order if the prices are decreasing and still make a profit.

CFD trading is much faster than trading physical bitcoins. Right from purchasing to selling, the entire process is more complicated and time-consuming when you are dealing with physical Bitcoins.

If you wish to trade Bitcoins using traditional fiat currency, you can do that with CFDs. As long as your broker does not insist on making payments in Bitcoins, you do not need to buy Bitcoins or even have any cryptocurrency.

You can trade Bitcoins on several trading platforms using any currency. Additionally, Bitcoins can be traded on several trading platforms against different currencies. 

Bitcoin CFD VS Bitcoin – The Verdict

We always have different options for the same security, instrument, or asset. These options exist because every trader and investor has different goals and strategies. This applies to trading cryptocurrencies like Bitcoins as well. One option cannot be deemed ideal because several factors influence the price fluctuations of any asset. Cryptocurrency is a highly volatile asset and can give tremendous results if your strategy is right. When it comes to volatile assets, traders are often suggested to change their strategies continuously. For example, if the crypto price is falling, you will benefit more by trading Bitcoin CFDs. If you want to hold a long position, you are better off with physical currency. Therefore, the question of what will win in the battle of bitcoin CFD vs. Bitcoin is void. Before you conclude, research the market conditions. You can follow verified crypto influencers for some tips as well. Make sure that you do not rush anything.



Igor has been a trader since 2007. Currently, Igor works for several prop trading companies. He is an expert in financial niche, long-term trading, and weekly technical levels. The primary field of Igor's research is the application of machine learning in algorithmic trading. Education: Computer Engineering and Ph.D. in machine learning. Igor regularly publishes trading-related videos on the Fxigor Youtube channel. To contact Igor write on:

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