Crypto
Cryptocurrencies (Crypto) are digital or virtual currencies that use cryptography for security and are not backed by real assets or tangible securities. Unlike traditional currencies issued by governments (like the dollar or euro), they
are traded between consenting parties with no broker and operate on decentralized networks based on blockchain technology—a distributed ledger that records all transactions across a network of computers.
The most well-known cryptocurrency is Bitcoin, but there are thousands of others, including Ethereum, Litecoin, and Ripple. Cryptocurrencies can be used for various purposes, such as online purchases, investments, or transferring value
globally with low fees and without the need for intermediaries like banks.
The decentralized nature of cryptocurrencies means they are not controlled by any central authority, making them immune to government interference or manipulation. However, this also introduces risks, such as volatility in value,
security concerns, and regulatory challenges.
Cryptocurrency CFD
Cryptocurrency CFDs (Contracts for Difference) are financial derivatives that allow you to speculate on the price movements of cryptocurrencies without owning the actual assets. With CFDs, you can trade on both rising and falling
prices, giving you the flexibility to go long or short. They also offer leverage, meaning you can control a larger position with a smaller investment, but this also increases the risk of larger losses. Unlike direct cryptocurrency
purchases on exchanges, CFDs don’t involve ownership of the underlying coins, so there’s no need for a crypto wallet.
How to Earn
Earning through cryptocurrency offers several opportunities for investors. One of the most straightforward methods is buying and holding cryptocurrencies like Bitcoin or Ethereum, anticipating long-term value appreciation.
To earn from cryptocurrencies, you have two main options: buying the actual digital currency on an exchange or trading cryptocurrency CFDs. If you believe in the long-term growth of cryptocurrencies, you can purchase and hold them
through an exchange, storing them in a secure crypto wallet. For short-term opportunities, trading CFDs allows you to speculate on price movements without owning the underlying asset, benefiting from both rising and falling markets.
Crypto CFD trading offers leverage, which means you can start with a smaller investment, but it also comes with higher risk. Choosing the right platform, understanding volatility, and leveraging your trading strategies are key to
earning from cryptocurrencies.
However, it's crucial to acknowledge the high volatility and risks associated with cryptocurrency investments, making thorough research and risk management essential to a successful strategy.
Terms to Know
Blockchain - The underlying technology behind cryptocurrencies, blockchain is a decentralized ledger that records all transactions across a network of computers. It ensures transparency, security, and immutability in the cryptocurrency space.
Wallet - A digital tool or software used to store, send, and receive cryptocurrencies. Wallets can be "hot" (connected to the internet) or "cold" (offline), with varying levels of security.
Private key - A cryptographic code that allows a user to access their cryptocurrency in a wallet. It must be kept secure and confidential, as anyone with access to the private key can control the associated funds.
Altcoin - Any cryptocurrency other than Bitcoin is referred to as an altcoin. Popular altcoins include Ethereum, Ripple, and Litecoin. Altcoins often offer different features or improvements over Bitcoin.
Exchange – Short for market capitalization, this term refers to the total value of a cryptocurrency. It is calculated by multiplying the current price of the coin by its total circulating supply. Market cap helps investors gauge the size and potential of a cryptocurrency.
Market Cap - The predetermined date on which the final settlement of the contract takes place in the futures market. Put simply, this is the date on which the two parties are supposed to fulfil their obligations, i.e. the buyer of the contract is supposed to buy the underlying asset, and the seller must deliver the underlying asset.
Liquidity - refers to how easily a cryptocurrency can be bought or sold without affecting its price. High liquidity means there is a large volume of trades, making it easier to enter or exit positions.
FOMO (Fear of Missing Out) - A psychological term often used in cryptocurrency trading, FOMO describes the anxiety traders feel when they fear missing out on a potential investment opportunity, leading them to make impulsive trading decisions.
