How is it like to trade Bitcoin? Trading this crypto currency is not as easy as buying and selling pancakes. In fact, Bitcoin commerce is more complex than FOREX trading. There are Do’s and Don’ts to consider in Peer to Peer Trading.
Here are the Dos:
- Answer all questions of sellers. Otherwise, they may get turned off or scared if buyers do not respond to their queries or answer them insufficiently. Responding to all inquiries and clarifications is the best way to conduct business. It guarantees that the buyer gets high or trusted reply feedback from the seller.
- Speak good English. For those who are not fluent in the language, it is advisable to choose an effective translation program to understand what the other party says. Or, pay another person who can help you converse properly. Lack of English skills may scare buyers or sellers. These people might think you are a crook or fraud. Bitcoin merchants are aware it is difficult to recover the currency once they release the currency. Any buyer can withdraw the Bitcoin right away. The bottom line is to speak good English for advertisements and during the interaction process. This is one way of developing trust with vendors. If this is not possible, trade with sellers in your native language.
Here are the Don’ts:
- Never leave your trades open if you do not have the time to deal with them. Many trades have failed simply because there was never any response from buyers. Conceal the trade while you are offline in case it is not possible to discuss terms and conditions with merchants.
- Do not attempt to defraud or take advantage of your counterpart. It is not advisable to cancel the trade immediately if the price of Bitcoin declines abruptly. Traders who come to Peer to Peer sites want to avoid this situation. The best recourse for you is to renegotiate the price if you think the price will continue to decrease. Feedback matters a lot. Each canceled transaction means a potential sale opportunity that will not happen again. Try to complete the trade no matter what happens to obtain positive feedback. Trades with sizeable volumes are also crucial because of the feedback factor.
- Never expect that Bitcoin trading is a Get-Rich-Quick Scheme. Initial purchases will be insignificant. Market traders have to be convinced first that you are a genuine, honest and dependable buyer. Prices will certainly rise and fall (these will be drastic at times) between trades. Buy and Hold techniques are quite effective especially for those who have made purchases during the last few years. Many traders were able to double their funds even if the price of Bitcoin was as high as $600. Establish a target to acquire the digital currency. Wait for prices to be favorable and stay away from the strategy of Panic-Selling. It will not help you in any way.
By following said pointers, prospective buyers can look forward to trade the crypto currency successfully. For those who are first-time traders, the question is what is so special about this currency?
What is Bitcoin?
Bitcoin is a crypto currency considered as very unique form of settlement which many people worldwide are not aware of at this time. It makes use of cryptography to regulate creation and remittance of money. Bitcoin is not a physical currency but digital form of money. Bitcoin addresses the concern of “double spending” inherent in digital commodities. If you an Mp3 file or electronic book on the desktop computer, it is possible to copy that file freely 1,000 times and send it to thousands of different consumers.
In the case of digital currencies, the risk of unlimited copying means rapid hyper-inflationary ruin. Bitcoin solves the problem by maintaining a peer-to-peer network and documenting every single transaction in a so-called public ledger known as the Blockchain. The Bitcoin you send to another person are being recorded by the network. In short, the coins in your wallet are transferred to the wallet of the other user.
Is there something very special regarding Bitcoin? The answer is yes. There are various contentions on whether the digital currency will succeed or not. It is not practical to discuss or refute these contrasting claims. Instead, the focus should be on profit opportunities offered by this one of a kind payment phenomenon. Things should be seen from perspectives of traders, consumers and prospective investors on the crypto currency.
Digital Currencies and Trust
Bitcoin depends mainly on trust unlike traditional currencies. There has to be trust in the system and all participants. Virtual currencies do not depend on any central authority. It relies on a decentralized system. The currency is mined using an algorithm with fixed limit of 21 million coins. There is no way to inflate, manipulate or impact these coins through politics.
There is trust in the currency since its encryption is tested. It has been proven for the last seven years. Trading networks exist and users see how the currency is mined. There is dependability because Bitcoin exchanges guarantee secure methods of converting the Bitcoin into other conventional currencies. At the same time, know-how is emerging since many consumers are accepting the Bitcoin as legal tender.
The currency’s public ledger chain manifests a predictable supply of money which cannot be hyper-inflated. Timely information demonstrates how the money rate takes place and prevents any form of misbehavior. Moreover, Bitcoin has a system of “Meritocracy” wherein mining of encoded puzzles unlocks 15 new coins to the miner who is able to solve the conundrum.
Exchange for value happens at that instant when Bitcoin is mined using computer processing processes. In terms of accountability, only 21 million BTC will be generated. These are pseudoanonymous but the Bitcoins are used and kept in a public ledger (Blockchain) that is transparent to all.