How is Bitcoin Trading making People Millionaire overnight?

How is Bitcoin Trading making People Millionaire overnight?

Bitcoin is not an unfamiliar concept anymore. People are conventionally accepting and dealing in this cryptocurrency as a new method of financial investment. Astonishingly, people are ready to take chances in Bitcoin, knowing well it is volatile and unstable. The reason for this confidence is the instances how bitcoin trading has made people millionaires overnight. Check this out and see how you can earn more with the help of Bitcoin Trader. Now, this is the right time to get introduced to Bitcoin Trading.

What is Bitcoin?

Bitcoin is a digital currency which transfers from peer to peer. It is often called with names like "digital money", "virtual money" or "future money." What makes it so interesting is the fact that it is operated by a decentralized authority, without the control of the government. Bitcoins do not have any physical existence. The balances are maintained in a public ledger in a very transparent manner, accessible to everyone. The banks or government do not issue or back this cryptocurrency, so it's not a legal tender even though it is high on the charts of popularity.

Bitcoin came into being in 2009 after renowned banks were exposed for rigging the system by misusing borrower's money. The unreasonable interest fees charged, took a toll on businesses and this had hit hard. People lose control of conventional currencies once they reach the bank. A lot of trusts are at stake as the central bank is expected not to debase the currency. But that trust is breached with fiat currencies as the banks get greater control over the economy.

People have no choice other than trusting the bank to keep their money safe and transfer it electronically when required. Banks often lend out his money under the influence of credit bubbles. Bitcoins are invented to let people take charge of their own money in a decentralized, independent and transparent method.

How it changes hands?

It cannot change hands, unlike other conventional currencies; the transactions are conducted by "miners." Specific individuals or companies are being given computing powers, which solely operate the bitcoin network. So, miners are the decentralized authority who prolongs the credibility of Bitcoin network. The miners get a limited supply which cannot exceed 21 million coins. As the collection is finite, the value depends on the demand. By the process of Bitcoin mining, Bitcoins are circulated within the network.

How to buy and sell commodities using Bitcoins?

As these are not physical coins, every transaction happens online. The proof of the existence of your Bitcoins is only records of transactions between you and different addresses. Increase & decrease of balance is reflected in a public record, which is regulated by miners and stored on blockchains.

If you want to buy a pizza from Martin, you have to send the bitcoin to the public address linked to Martin. The public address is like a bank account for Bitcoin. You are required to sign off the transaction with your private key. This step verifies that it was, indeed, you who transferred the Bitcoin. To eliminate the trials by hackers, the miners verify the transaction. Then the Bitcoin is forwarded to Martin, and it can be unlocked with his private key. Your transaction would be transparent to all other participants, called "nodes" in the blockchain network, and it will go through a process of technical and business rules, called "mining." It gets confirmed after 10 minutes. While the transaction is mining, Martin will get an option of whether to accept your transaction or not.

What is bitcoin trading?

Bitcoin trading is the speculation in the movements of cryptocurrency's price. Initially, it started with buying Bitcoins through exchanges and expecting the price to rise. But as people are getting more involved, they are using derivatives to anticipate both rise and fall in prices. This way, they can benefit from Bitcoin's volatile nature to the fullest.

Factors responsible for fluctuation in Bitcoin's price

1. Limited supply- The current limit for the supply of Bitcoin is 21 million. This is anticipated to exhaust by 2140. Increase in the demand and shortage of supply will only elevate the price.

2. Bad press- As the idea is still very unconventional to the masses, any breaking news revolving around Bitcoin's security, value or longevity will directly have an impact on the overall market price.

3. Integration- The more Bitcoin is integrated into local transactions and banking frameworks, the more will it have a positive impact on the price.

4.Important events- Any regulatory changes, security breaches, and macroeconomic announcements can have a toll on the prices.

Strategies in Bitcoin Trading

1. Trend Trading Bitcoin

It implies following a trading-trend and reserving a position as per the current trend. If you see the market to be treading in the bullish trend, it is the perfect time to go long. When the market is undergoing a bearish trend, it is wise to go short. In times when such trends seem to slow down or reverse, experts advice to close your old position and invest in a new one which is more compatible with the trend.

2. Bitcoin hedging strategy

Hedging Bitcoin allows diminishing the anticipated loss by investing in an opposing position to what you have already invested in. When the market doesn't seem to work in your favor, bitcoin hedging strategy is what you should apply. For instance, if you own certain bitcoins whose price drop is expected, you can open a new short position with CFDs. The advantage is that even if the price of your old bitcoins drops, the new position covers up for the losses.

3. HODL bitcoin strategy

The name "HODL" has derived from a spelling mistake in a popular cryptocurrency forum. It elaborately now stands for "hold on for dear life." Please don't take it very seriously. This strategy asks you to buy bitcoins and hold it if a price increase is anticipated in the long-term. But if your research speculates a price drop shortly, it is better to sell the position to retain the existing profit and limit future losses.

4. Day trading Bitcoin

To put simply, it is the opening and closing of a position within a single trading day. Your bitcoin market exposure is limited to only that day and not overnight. This is popular because the overnight funding charges are not applicable. This is for people who are looking to gain an immediate benefit from the ever-volatile nature of bitcoin price movements. You can make the most out of daily fluctuations.

Tips for Bitcoin trading

1. Have fluency in technical analysis

As Bitcoins do not follow the traditional financial theory, any news event or other financial instruments can highly impact the value. The pricing of Bitcoins is based on speculations. Hence, it is possible to predict a bitcoin's future value based on the current price. For that, it is essential to be well versed with technical analysis before trading in Bitcoins.

2. Adopting a sustainable pace

It is essential to track the optimal hours to trade and focus only on those periods. Spending long hours will only burn you out and degrade performance.

3. Be aware of the news

Any headline can negatively impact the Bitcoin market. As there are no GDP releases or inventory reports, attracting people and building confidence becomes difficult.

4. Keep a window to stop losses

Fluidity is a characteristic which attracts active traders and investors towards Bitcoin, but that can also result in catastrophe. It is necessary to implement a stop-loss in the market so that you are able to protect your existing positions.

5. Use Leverage wisely

Too much leverage brings out a reckless attitude towards money management and too little pulls back the performance. A simple way to maintain a balance is the 3% rule. It advises assigning a maximum of 3% of your trading account to a single trade.

Characteristics of Bitcoin transactions

  • Irreversibility: Once miners confirm a transaction, there is no way to change it. Nobody holds the authority to reverse, not you or your bank, not the president of the US, your miners or Satoshi himself. It becomes impossible to get back your bitcoins if you mistakenly send them to a scammer.
  • Use of Pseudonyms: No accounts or transactions are connected to the real identities of the physical world. The Bitcoins are received on unique addresses which are a random jumble of 30 characters. The transaction flows are kept very transparent, but it is not possible to trace back the addresses with real-world identities.
  • Quick and global: Transactions flow very quickly and get confirmed within a few minutes, making the process very fast. As the network is spread globally, no transaction depends on physical location. It is as fast to send bitcoins to your neighbor as to someone on the other part of the world.
  • Security: It is often said that a bitcoin address is safer than Fort Knox. The key to this is mathematics. There are complex mathematical codes used to construct your private key, which makes it near impossible to be hacked. Only the owner of the private key has the authority to send cryptocurrency. The strong cryptographic technology and the jumble of big numbers keep the network safe. Bitcoin funds are stored in a public key cryptography system.
  • Permissionless: There is no intermediate and hence, no long procedure for a grant. Cryptocurrency is a matter of choice. If you want to transact in Bitcoins, you are just one software away. Install it, and you are immediately given the right to access Bitcoins. You can receive and send them to other bitcoin users. There is no authority to stop you from transacting in Bitcoins.

The popularity of Bitcoin has only reached new heights. People are enjoying the new freedom of a decentralized payment system, which can settle any International deal within minutes, without having to worry about exchange rates and extra charges. The process is very transparent, which arouses a feeling of security in people transacting in Bitcoins. Also, the characteristic of bitcoin to fluctuate frequently often works in favor of traders.