A cryptocurrency is a decentralized, peer-to-peer, digital currency. Such currencies, their payment system, and their issuing technique generally do not fall under the control of any centralized authority. The value of a cryptocurrency is determined solely by the market via the typical dynamic of balancing supply and demand.
Thousands of cryptocurrency specifications currently exist and most are similar to the original fully implemented decentralized cryptocurrency, which is known as bitcoin. Cryptocurrency systems need to maintain the safety, balance and integrity of ledgers to sustain market confidence and this is typically done by a community of miners that are mutually distrustful members of the public who employ their own computers and sometimes specialized devices to validate and timestamp transactions and include them in the cryptocurrency’s ledger.
Most cryptocurrencies also include a means of gradually reducing currency production which places an effective cap on the currency in circulation and gives them greater value like precious metals. In terms of market capitalization, the primary cryptocurrencies are currently Bitcoin, Ethereum, Ripple, Litecoin and Montero. Cryptocurrencies can also be harder to seize by law enforcement in the present rather experimental environment.
Cryptocurrency Trading Brokers
Here are a few trusted brokers that offer trading in bitcoins and other major cryptocurrencies:
| Broker | Features | Regulator | Platforms | Next Step | |
|---|---|---|---|---|---|
 Between 74-89% of CFD traders lose
Founded: 2010Between 74-89 % of retail investor accounts lose money when trading CFDs |
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ASIC, FCA | MetaTrader 4, MetaTrader 5, cTrader | ||
 Your capital is at risk
Founded: 2006Europe* CFDs ar... |
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ASIC, FSA, FSB, MiFID | MetaTrader4, Sirix, AvaOptions, AvaTrader, Mirror Trader | ||
 77% of CFD traders lose
Founded: 200777 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. |
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ASIC, CySEC, FCA | eToro Platform | ||
 Your capital is at risk
Founded: 2014 |
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FSPR | MT4 | ||
 Your capital is at risk
Founded: 2006 |
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CySEC, DFSA, FCA, FSB, SIA | MetaTrader4, MetaTrader5, cTrader, FxPro Edge (Beta) | ||
Bitcoin – The First and Most Popular Cryptocurrency
Bitcoin was the first decentralized cryptocurrency, and it remains one of the most popular among traders. Bitcoin was created by a team of programmers known collectively as Satoshi Nakamoto and was released as an open-source project in 2009. Embraced by a number of programmers drawn in by the obvious advantages presented by a decentralized and free-floating currency, bitcoin began to gain gradual acceptance and was also aided by the fact that it was one of the first-comers to the crypto-currency scene. More and more merchants began accepting bitcoin payments and as central banking authorities made it clear they would not encourage law enforcement to crack down on the budding digital currency economy, the value of bitcoins exploded.
This encouraged online exchanges and wallet services to spring up, which in turn made it easier for people to purchase, hold and spend bitcoins. While some of these services ended up going down in flames, and in some cases nearly dragging bitcoin down with them into oblivion, bitcoin prevailed, and it even managed to thrive.
An important feature of bitcoins is the distributed public ledger called the blockchain, in which every bitcoin-based transaction is registered. Such transactions take place between users directly, without any intermediaries and they are verified by network nodes, before they’re recorded in the blockchain. All these operations are performed by a network of computers belonging to bitcoin miners. Maintaining the blockchain and sorting out transactions is handled by miners, who are rewarded with bitcoins for the work they do. Besides sorting out transactions and blockchain-related information, miners have to solve increasingly complicated mathematical problems too.
Due to the number of mathematical computations involved and the cost of electricity required to perform that task, bitcoin mining has become extremely difficult and no longer profitable for most miners. These days, advanced Application Specific Integrated Circuits or ASICs are used that are typically installed in custom built mining boxes. Still, even with that equipment, bitcoin mining is typically only profitable in Iceland and China where local conditions involving cold weather and cheap electricity are major beneficial factors. Besides mining, bitcoins can also be obtained through trading, as well as through its acceptance as payment for various goods and services.
In terms of its value, bitcoin’s price history has been quite a rollercoaster ride and one bitcoin is currently worth more than $3,400 per unit as of January 2019. The bitcoin market has already seen several cycles of boom and bust.
Cryptocurrency Brokers and Trading
Most bitcoin and cryptocurrency users turn to an exchange to sell their cryptocurrency for fiat currency. Nevertheless, in some cases – especially when larger volumes are concerned – various brokers handle such transfers as an Over the Counter or OTC transaction. Having such OTC trades handled by seasoned brokers serves to protect the cryptocurrency from increased volatility due to large size transactions being executed on an exchange traded market. For a list of exchanges try BestBitcoinExchange.
Besides being dealt through specialized cryptocurrency brokers and exchanges, virtual currencies are also traded by reputable forex brokers who have added bitcoins and perhaps certain other cryptocurrencies to their selection of tradable assets available to their clients. When transacted through these brokerages, cryptocurrency trading profits are realized in the traditional manner by buying low and selling high.
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