What is Cryptocurrency?
Cryptocurrency is a virtual currency. It is not a tangible entity but a digital asset but can be used as a medium of exchange. Any federal or central bank does not issue these currencies. These depend on cryptography, a technique that is used in various banking and other applications. Here, cryptography is responsible for ensuring the security and verification of every virtual denomination.Â
Cryptocurrencies are coded using various links. Every individual coin is recorded in a virtual ledger. There is a computerized database that records the ownership of every single unit. The first cryptocurrency was Bitcoin which came into existence in 2009. It was meant to be mined using codes. It wasn’t meant to be bought by every ordinary man. Soon, more cryptocurrencies like Litecoin, Ripple, Ethereum, Dogecoin, and Coinye. The cryptocurrency trade was made legal in 2011. Thus, it is still a new form of trade that hasn’t reached its full potential.
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Crypto Broker Comparison
When we make a crypto broker comparison, we see that we have world-famous forex and CFD trading brokers that offer crypto trading and several brokers that offer only crypto trading. World-famous forex brokers are our recommendation for all traders because you can deposit and withdrawal using bank wire, credit cards, and various payment services. There are no various deposit options for specialized crypto brokers, and we can see a lack of regulation.
The best broker for crypto is Hotforex
Hotforex Crypto Trading – Hotforex is the best crypto CFD broker (best forex crypto broker). At the same time, you can trade forex, equities, commodities, crypto trading. Because of excellent support and MT4 platform, fast deposit, and withdrawal, it is one of the top world brokers.
Now we can split brokers into two categories – forex brokers that offer crypto trading and specialized brokers for crypto trading.
Below are crypto brokers that offer forex and stocks CFD trading as well:
| Forex broker Review | Visit | Min. trading lot size | Max. leverage | Min. deposit | Pip rebate | Rating | Promotions |
|---|---|---|---|---|---|---|---|
Hotforex | Hotforex | 0.01 | 1:1000 | $1 | 0.4 | 98 | Â  |
Instaforex | Instaforex | 0.0001 | 1:1000 | $10 | 1.6 | 90 |  |
FxPro | FxPro | 0.01 | 1:500 | $100 | 0.3 | 88 | Â  |
Avatrade | Avatrade | 0.01 | 1:400 | $1 | 0.9 | 85 | Â  |
Dukascopy | Dukascopy | 0.01 | 1:100 | $500 | 0.55 | 83 | Â  |
| 0.01 | 1:2000 | $10 | 0.1-2 | 80 | |||
XM.com | XM.com | 0.01 | 1:888 | $5 | 1 | 78 | Â |
| Octafx review | Octafx register | 0.01 | 1:400 | $50 | 1 | 70 |  |
Below are Crypto Brokers that are specialized in crypto trading:
PrimeXBT offers a minimum deposit that is very low at just 0.001 BTC. Excellent broker, but all payments are in bitcoins.
Finance is another bitcoin crypto broker.
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The Characteristics of the Cryptocurrencies and crypto trading brokers
Cryptocurrencies are not directly controlled by any bank or government institution. They come with their own set of characteristics that make them stand out from conventional currencies like dollars, pounds, and euros. Here are some of three unique features:
1. A P2P Network
Earlier, when the bitcoin was created, coders had to mine them using various codes. Bitcoins couldn’t be bought; they had to be discovered. Such is not the case at the moment as cryptocurrencies are being commercialized. However, even today, it still follows the same P2P network. There is no third party involved. Governments or financial institutions don’t regulate the transactions made in cryptocurrencies. It is done directly between you and the recipient.
These transactions endorse a peer-to-peer network. You can send or receive a cryptocurrency using this network.
2. Irreversible Transactions
It is not uncommon for buyers and sellers to cheat on each other. When making any transaction using the conventional mode of payment, it can be easily reversed, and one party may be duped. For example, if you are a seller who has dispatched an order against the advance payment made by a buyer, you can still be holding the shorter end of the stick at the end of the trade. This can happen if the buyer is not genuine. They can cancel the transaction after receiving the notification that their order has been dispatched. In such a situation, they will end up keeping their money and your products, but you will be left with nothing.Â
Transactions made in cryptocurrencies cannot be reversed. Once the payment terms have been settled and the transaction has been made, you are bound to receive your due. This also means that there is more transparency here.
3. It is Decentralized
Cryptocurrency transactions can happen anywhere as they are not centralized. You are not required to pay any fee or charge for transferring the money. This is possible because the transactions are maintained the blockchain technology.Â
Blockchain is a Bitcoin technology. It provides data related to the cryptocurrency in the form of lists or blocks that cryptographers can use. This recorded data is also known as the ledger. With every exchange of data or a new transaction, the information is added to the ledger in the form of a block. Thus, a blockchain of information is formed.Â
These blockchains are very strong and highly encrypted. No one on this planet can hack these. This ensures that your data remains safe forever.
Trading Cryptocurrencies
Cryptocurrency trading is still a new and budding market. Many traders don’t have enough knowledge about it. It is not even completely legal in many countries as well. But, if you want to invest in it, we would suggest you first find a reliable broker. Without one, you might end up losing more than you had anticipated.
There are not a not of brokers who offer cryptocurrency trading. Before we tell you more about finding an online broker, let us explain what cryptocurrency wallets are.
Cryptocurrency Wallets
Just like you use your physical wallet to keep money or your virtual wallets like PayPal to send and receive money, you can do the same with a cryptocurrency wallet. There are three types of cryptocurrency wallets. These are as follows:
Hardware Wallet – a hardware cryptocurrency wallet is stored online. This does not mean that you will get a physical wallet. It simply means that all the data will be made available offline. This makes a hardware wallet the most secure type of crypto wallet. Some of the examples are Keepkey, Ledger nano S., and Trezor.
Paper Wallet – when you take out physical prints of your public and private keys and store them conveniently, it is called a paper wallet. It is a popular cryptocurrency wallet but not secure enough.
Software Wallet – a software wallet is considered the most convenient cryptocurrency wallet as it can be accessed from your mobile and computer. Some of the examples of this wallet are Jaxx, Electrum, and Exodus.
Cryptocurrency Exchange
A cryptocurrency exchange is just like your conventional trading. You can buy, sell, or trade these virtual coins with the assistance of a broker. In the cryptocurrency market, you have various options at your disposal. You can do crypto-to-crypto trading where there is no conversion to conventional money or trading with crossover currencies. You can trade from fiat to crypto and vice versa.
Bitcoin exchange or Binance exchange is regarded as the most famous exchange of cryptocurrencies. Here, you don’t need conventional money as you can directly trade crypto with crypto. On the other hand, LocalBitcoins offer over-the-counter trading of these first virtual coins. It is like eBay; you can post the currency for sale along with a price desired by you.
ICO and Token
The Initial Coin Offering or the ICO can be equated to fundraising to support a start-up. Underlying tokens are sold against Bitcoins or Ethereum to raise funds. The whole process is similar to an IPO, where company shares are sold to the traders. Traders become a part of the start-up at an early stage and make profits as the company succeeds.Â
The core difference between ICO and IPO is that the former is decentralized while the latter is centralized. This means that everyone can participate in ICO irrespective of their nationality or location, while certain restrictions are on IPO.
Tokens are a kind of cryptocurrency as well but specific in nature. You can sometimes use them as loyalty points to get discounts. At times, it can be converted into bitcoins as well.
What is Cryptocurrency Mining
Like miners use their tools and equipment to find coal, precious metals, minerals, or what they are looking for, Bitcoin miners work similarly. They have to mine cryptocurrency using their tools – adequate hardware, computers, and the ability to solve mathematical problems. At the end of solving these problems, miners get their reward, which is cryptocurrency.Â
These mathematical problems are linked to the blocks. Once you have solved the problem, you get the information about the transaction contained in these blocks. These blocks then join the blockchain that we explained earlier.Â
Mining cryptocurrency is a competition. Various miners attempt to solve these problems in the least amount of time to get the cryptocurrency before other miners. You can win or lose depending on your resources and mental abilities.
Crypto Broker Comparison
Crypto broker comparison is based on several things. Considering that this market is just 9 years old and very different from Forex, stock, and any other trading market, one must be vigilant while finding an online broker. Without a doubt, it is a volatile asset. Bitcoin has seen extreme price fluctuations in the past.Â
Many veteran traders don’t even consider cryptocurrency a valuable asset. Though, we cannot neglect the fact that this may be because there is a lack of education.Â
There are not a lot of established brokers who offer cryptocurrency trading. There are a few things that you must check before investing your money. Here is a checklist that you can use before settling for any cryptocurrency broker:
Q1. How long have they been in business? (especially crypto)
When you want to trade Forex or any other instrument, you must look for a broker who has been providing services for at least 2 years. When looking for a cryptocurrency broker, reach out to them to know how many years they have been trading the virtual currency. They can trick you by telling you their total years of experience. Be specific and find out their experience in dealing with cryptocurrency.
Q2. Which cryptocurrencies are they offering?
Several cryptocurrencies can be traded, Bitcoin being the most famous. But it is better to have options.
Q3. What is the size of their customer support?
Never underestimate the importance of customer support. Any broker that offers round-the-clock support in different languages will always have the edge over its competitors.
Q4. Are they regulated?
Regulated brokers are legit. They cannot manipulate market prices for personal gains or use your money in case of an emergency or bankruptcy. You can even challenge a regulated broker in case of any discrepancies. Since cryptocurrency is regarded as a volatile asset, you cannot afford to partner with an unregulated broker.
Q5. How fast are they in processing deposits and withdrawals?Â
The ideal deposit and withdrawal should not exceed 3 days. Some brokers even offer instant withdrawal at an additional cost. Longer withdrawal time can be risky. So, check before depositing funds.
Q6. What are the additional charges?
Most established brokers won’t charge you for inactivity, withdrawals, and deposits, but it is not a universal practice. Ask your broker about their additional charges not to be blindsided later on.
Q7. Are they recognized globally?
As we have mentioned numerous times throughout the article, cryptocurrency is a volatile asset, and its trading market is not even a decade old. In such a situation, you cannot be too cautious. The best practice here would be to hire an online broker that already has a global presence and a reputation to maintain. Established brokers use better technology and constantly upgrade their skills. The chances that they will have more knowledge about this market are higher.
Q8. What is the minimum required deposit?
Every trader and investor must keep a minimum deposit with their broker while opening a trading account. This is a safety measure that brokers take. This deposit can be as low as $1 with no upper limit. Analyze your budget before you finalize a broker and open an account.
Conclusion
There is still a general lack of knowledge about cryptocurrency. As there is no physical proof of this asset, many consider it unpredictable, and it has proven to be so in the past. There is a lack of cryptocurrency brokers as well in the market. Since it is not a centralized currency, many countries like India, Algeria, Nepal, Bolivia, Pakistan, Morocco, and Vietnam have even banned it. However, this market is becoming steady slowly. We predict that it will take a little longer for cryptocurrency trading to turn into conventional trading. If you are a new trader or not experienced enough, we would advise you to invest in Forex, stock, CFDs, or other instruments. Irrespective of your experience, the truth remains that this is a precarious market, and you will need an expert by your side to navigate through it.
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:
igor@forex.in.rs
