If bitcoin trading has piqued your interest in recent weeks or months, you might be left wondering how and where you can get into trading this popular cryptocurrency. Let’s take a look at bitcoin trading and get right back to basics.
What is Bitcoin trading?
Bitcoin (often written shorthand as BTC) is a cryptocurrency that is both decentralized and digital. It was the first such currency of its kind across the globe. Its inventor, Satoshi Nakamoto, first developed the cryptocurrency in 2009. Bitcoin is not issued by any government; instead, it is a unit of account, store of value and an exchange medium.
Each transaction with Bitcoin happens on an online peer-to-peer network that has no central authority or server. There isn’t a bank that needs to be contacted before transactions are cleared. There is a verification process that is decentralized, which means banks are able to transfer funds among themselves for less money compared with traditional methods. At the moment, money transfers across country borders have high fees and come with exchange rates that are higher because the banks need to try and cover their costs.
The technology behind cryptocurrencies like Bitcoin is Blockchain. A simple explanation of this technology is that it is a ledger of which bitcoins are owned by whom. Each bitcoin transaction is sent to the network and incorporated into the Blockchain – the key terminology here is ‘mined’. When you own bitcoins, what you actually own are the digital ‘keys’ that will unlock the Blockchain allowing you to spend funds.
In Australia as well as many places across the globe, there are more and more places that are willing to accept Bitcoin as a payment method. However, if we consider how ‘young’ this currency is and how uncertain it might be, it is considered as a huge risk to many.
Where to source Bitcoin trading in Australia
The price of a single Bitcoin is pretty high, which puts many people off. However, it is possible to buy bitcoins in smaller chunks! Each bitcoin can be divided up to as much as 8 decimal points. In Australia, there are a few different ways of buying and trading Bitcoin, let’s look at some of them.
Buying BTC from an exchange
There are bitcoin exchanges all across the globe. These are places for bitcoin trading as well as other digital currencies. If you decide to use bitcoin exchanges for bitcoin trading, you’ll need to know about any merchant charges as costs vary between exchanges. The main Australian exchanges for trading bitcoin are:
- Bitcoin Australia
- BTC Markets
- Independent Reserve
- Buy A Bitcoin
Accepting bitcoins for services and goods
Any individual or business can accept payments with bitcoins if they have a digital wallet for bitcoin to store the currency. You can download a bitcoin wallet from Google Play or Apple stores and will have to decide how you want to accept payments. Here are a few ways in which you can accept payments:
– Payment systems that automatically convert bitcoin or other digital currencies into a traditional Australian currency like the Australian dollar.
– A QR code that can be scanned with a smartphone that generates into a digital wallet app for bitcoin.
– Custom POS (Point of Sale) terminals that can integrate with existing sales registers.
Mining your own BTC
The technical term for discovering unreleased, new bitcoins is ‘mining’. ‘Miners’ run special software to ‘unlock’ virtual padlocks, behind which all bitcoin transactions are gathered in boxes. Essentially, they’re verifying transactions using bitcoins across a multitude of networks and their reward is earning new bitcoins.
In the early days of bitcoin, this was pretty popular but with bitcoin expanding continuously, these options are somewhat limited to centralized miners who have bigger budgets. This is due to the fact that you need to have a huge network of computers to have enough power to do this.
Where to store bitcoins and Bitcoin trading
If you’re thinking of trading bitcoins, you will need somewhere secure to store them. It is not recommended to store them in a bitcoin trading exchange. Instead, it’s best to keep them in a digital wallet used specifically for bitcoin trading.
App stores have a number of wallet options as do computers and laptops so it’s best to do a bit of comparison before deciding which bitcoin trading wallet suits you best. You can get apps that can help to protect small sums of bitcoin that are protected with private keys on mobile devices. Also, these have an added benefit of having QR codes – this saves you time when you want to send money and have a long bitcoin address.
Where is bitcoin accepted in Australia?
Now that you’ve got the bitcoin basics, you might want to know what you can actually do with your bitcoins. Cryptocurrency is expanding all the time and there are many opportunities arising year on year. It is possible in some places, to pay for your cappuccino or dental appointment in bitcoins. A quick search online will give you a list of places (stores/ATMS etc) that accept bitcoins.
When you’re comfortable with bitcoin, you might want to start thinking about bitcoin trading. There is a number for bitcoin trading exchanges in Australia. Trading cryptocurrencies is not dissimilar to trading traditional stocks. It does, however, come with much greater a risk and there are important things everyone should know before embarking upon bitcoin trading.
Trading in any given market isn’t easy. In fact, 95% of traders will fail and most of the failures occur in the first few months. The cryptocurrency market is arguably the most difficult for beginners in bitcoin trading. Here are some reasons why:
The market is always open
Bitcoin can be done round the clock. This puts pressure on traders as they feel they should be trading all of the time. Common issues with traders are fatigue and the fear of missing out (FOMO). New traders often find it hard to take a step back which can ruin finances and lives.
Bitcoin trading Fundamentals
There are no fundamentals in bitcoin trading. When a trader buys stock, they can review sales reports, quarterly earnings, the company’s history, and many more success criteria. What’s more, companies listed on the stock exchange will be regulated and, therefore, transparent. This means you know what you’re buying.
For bitcoin trading, traders have to rely on their technical analysis – this is difficult for newcomers.
Final thoughts – the myth of getting rich quick with bitcoin trading
Bitcoin appeals to many people who are looking to turn a small amount of funds into a retirement pot. This is unrealistic. People who have got rich quickly by trading bitcoin were probably just lucky rather than good at bitcoin trading. Furthermore, there is a difference between being rich on paper and being rich in real life. The vast majority of bitcoin traders who did make a lot of money in bitcoin trading failed to sell when they were at the top and so they saw their wealth disappear very quickly – before it turned into real-life wealth.
A person who wants to begin trading is much less likely to end up broke if they buy random stock than if they start bitcoin trading. The stakes for bitcoin trading are much, much higher. Bitcoin trading is not a safe investment for most people. It should only ever be a small part of any trader’s overall trading portfolio.