The Pros and Cons of trading Bitcoin

It is an undisputed fact that most internet users have heard of the word “cryptocurrency or bitcoin”. The first cryptocurrency was launched far back in 2009 (bitcoin) by an unknown person or group of persons called Satoshi Nakamoto.

Cryptocurrency is actually not a new word. This word has been in use for over a decade, and now it’s a payment option and an investment for people. This article will be focusing more on the advantages and disadvantages of bitcoin and cryptocurrencies. But before delving further, it is essential to talk about what is Bitcoin, some of the basics of bitcoin trading, and essential points you need to know about bitcoin or cryptocurrency.

The first and most important thing to discuss is how to get bitcoin. This is because if you don’t have bitcoin, you cannot trade.

How do you get your Bitcoin?

You have different options for getting bitcoin, and we have a list of the top options below.

1. You can buy your bitcoin on an exchange

A bitcoin exchange is a platform or a website that allows users to trade bitcoin or other cryptocurrencies with a fiat currency or any other currency pair. This means you can buy bitcoin with your USD or bitcoin with naira, or any currency you want depending on the exchange you are using.

Find out how to create a bitcoin account in just 2 minutes.

2. Mining

Mining is the primary and traditional way by which people get the coin. This means you have to solve some mathematical puzzles, and you get a reward in a coin. Bitcoin mining might look very easy, but in the real sense, it could be a tiring and time-consuming process.

3. Bitcoin Transfer

Bitcoin transfer is another option whereby you get bitcoin from someone who has put up his BTC for sale. That is, the person must have bitcoin or cryptocurrency he/she would like to sell, which would then be sent to your bitcoin or any cryptocurrency to your wallet.

Now, we go into the article’s body, as we’ve explained briefly what is Bitcoin, how to get bitcoin and cryptocurrency. Let’s talk about the advantages and disadvantages of trading bitcoin and cryptocurrencies.

Advantages of trading bitcoin

1. Bitcoin has been consistent, and it has a good track record that has been built over the years

Bitcoin has scaled short and long hurdles over the years, proof that it is here to stay for long. Staying and leading the crypto market shows that bitcoin is a trusted cryptocurrency. Bitcoin is one of the top methods people now use to make payments across the world. The good news is that several stores now accept bitcoin as a payment source.

2. Bitcoin allows diversification

With bitcoin, you don’t have to be concerned that your money is in one place; you are not keeping all your eggs in one basket. You don’t need to be concerned about the government’s debt or loss in the value of your fiat currency. You can spread your bitcoin or cryptocurrency over different portfolios.

3. Bitcoin has a whole lot of momentum

The current price movement of crypto assets like bitcoin, ethereum, and others, have shown that there will always be a light at the end of the tunnel for every cryptocurrency trader. Looking at the momentum from different charts, you will know that no matter how people complain about the bitcoin dip, there will always be profit at the end.

Having looked at the advantages of bitcoin trading or cryptocurrency, it is time to go into the disadvantages.

Disadvantages of bitcoin trading

We won’t shy away from the fact that the current surge or spike in bitcoin and other altcoin prices have been a lot of people’s attention. This means there would be a surge of new bitcoin traders. But the truth is that there are disadvantages that come with trading bitcoin and cryptocurrencies.

Let’s run check out some of these disadvantages.

1. Trading because of the trend

Most of the new cryptocurrency traders begin trading only because they want to follow the trend. Most people believe that trading is the buying and selling of cryptocurrency only. However, the truth is that trends only last for a short period. The moment the trend ends, the difference won’t be clear to newbie traders. They would have to go back to their old way of trading, and loss will start looming. There are lots of newbie traders that were lucky to follow trends and make profits. Because of the profits they have made, they considered themselves good traders. But in the long run, they end up making more losses than profits.

The bottom line is that, to trade bitcoin, you have to be strategic. Stay glued to charts, follow analysis and maps, and you will be glad you are doing so.

2. Bitcoin and other cryptocurrencies are volatile

Unlike other digital financial assets, bitcoin is different because the price of bitcoin can go from zero to hundred in less than an hour. In fact, volatility is very good for bitcoin trading because there are times when the price will spike, and it’s a good one for traders. However, there is always bad in the good, and that is where the bitcoin price falls. When the volatility is too much, traders won’t find it perfect because there would be lots of uncertainty. The best thing every trader can do is to find the right time to enter and the right time to exit the market.

3. Central Bank and government of nations are having conflicts with cryptocurrencies

The fact that bitcoin and other cryptocurrencies were not rated by the central bank makes it seem like the bank’s big competition. There are countries where bitcoin is not accepted and allowed because the central banks are finding it difficult to map out policies to regulate cryptocurrencies. This may create economic uncertainty and slow adoption.

In the long run, if the central bank also doesn’t pay attention, they might not be relevant when people begin to fully accept digital currencies like bitcoin.

The bottom line: the winner in any crypto trading is the person that understands what is Bitcoin, survives during the downtime, and the person that also gets it right during the bull run. Analysis of cryptocurrency is critical if you want to win in the business and remain relevant. Bitcoin is the number one cryptocurrency regarding transaction volume, total market capitalization, and popularity.