Statistics show that crime rates reflect an upward graph in 2023. For example, in the first half of 2022, approximately 236.1 million ransomware attacks were reported worldwide. While many crimes are considered in that graph, the one that accounts for the majority is cybercrime, in 2022 alone, investment fraud was the costliest form of cybercrime, with an average loss of $70,811 per victim. And digital currency is proving to be essential in combating cybercrime as the first line of defense.
Despite such frauds, digital currency has taken over the banking and financial sectors. Today, Bitcoin, Ethereum, Polygon, and Terra 2.0 are just a few of the popular names reigning in the world of digital currency and investors from a diverse age demographic are actively taking part in digital currency trading.
This blog will discuss digital currency and digital currency trading at length, going through its meaning, advantages, disadvantages, and other important segments.
What is Digital Currency Trading, and How to get Started?
Digital currency is a currency that is exclusively digital, decentralized, and secure. In recent years, digital currency trading has become increasingly popular, with more and more people interested in investing in this new type of asset. If you’re new to digital currency trading, you should know a few things to get started.
Something that separates digital currency from electronic money is that the former cannot be liquidated. However, the latter could be withdrawn from an ATM at any time.
The first thing to understand is that digital currency trading is similar to traditional stock trading. Just as with stocks, digital currencies are bought and sold on exchanges. These exchanges allow you to trade your digital currencies for other digital currencies and traditional fiat currencies like the US dollar.
The next step is choosing your stock. When selecting an exchange, it’s essential to do your research to find one that is reputable and trustworthy. Look for a deal with a good track record, is regulated by a respected authority, and has robust security measures to protect your assets.
You can buy digital currencies with traditional fiat currencies or trade other digital currencies. Once you’ve chosen an exchange, you need to set up an account and fund it with the digital currencies you want to trade. Be sure to pay attention to the exchange rates and fees associated with each transaction to ensure you’re getting the best deal.
Once you are done with the account setup and funding, you can start trading. Digital currency trading is a highly volatile market, so staying informed and keeping up with the latest news and trends is essential. This can help you make informed trading decisions and avoid significant losses.
Given the basics are in place, you should keep the following pointers in mind while trading in digital currency:
- Have a strategy in place when trading digital currencies
- Keep yourself updated on the latest trends, news, and trading methods.
- Diversify your portfolio
- Setting stop-loss orders to limit your losses
- Do not put all your eggs in one basket
- Trade only if you want to, not because you feel pressured
- Avoid putting your life savings into trading
- Stay disciplined with your trading strategy
Having said that, Digital Currency Trading is a double-edged sword. Investors must be familiar with the pros & cons of trading in digital currencies.
Pros
Quicker payments: Digital currencies allow payments to be completed much faster than current methods, such as ACH and wire transfers, which can take days for financial institutions to confirm transactions.
Cheaper international money transfers: International currency transactions are costly. Especially when it comes to currency conversion, individuals are charged high fees when transferring funds from one country to another. Digital assets can disrupt this market by making it faster and cheaper.
24/7 access: Existing transfers often take longer on weekends or outside regular business hours when banks are closed and cannot confirm transactions. In digital currency, trading occurs 24 hours a day, 7 days a week, at the same rate.
Well-structured government payments: If the government developed its Central Bank Digital Currency (CBDC), it could instantly send people payments for tax refunds, child support, food stamps, etc., instead of mailing checks or finding prepaid debit cards.
Cons
Too many options: The current popularity of digital currencies has a downside. So many digital currencies are being created on different blockchains, each with limitations, that it takes time to decide which is the best.
Steep learning curve: Digital currencies require work on the part of users to learn how to perform basic tasks such as learning to open your digital wallet and storing your digital assets securely and adequately. The system needs to be simpler for digital currencies to become widely accepted.
Price fluctuation: Cryptocurrency prices and values can change suddenly. However, CBDC’s value is much more stable than in fiat currency and does not fluctuate as much.
Bottom Line
In conclusion, digital currency trading is a potentially lucrative investment method. However, it’s vital to research, choose a reputable exchange, stay informed, and have a solid trading strategy. While digital currency trading can be highly profitable, it’s important to remember that it’s also speculative. Always invest only what you can afford to lose, and never invest more than you’re comfortable with. Following these tips can increase your scope of success and minimize risk in this exciting new market.
