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What Are The Benefits of Cryptocurrency Trading?

10 Min Read
Last Updated March 27th 2021

Take a look at the benefits to trading on cryptocurrencies, and discover why it has become a popular alternative to other assets.

In these times, you cannot talk about finances and not mention cryptocurrencies. Throughout the globe, when talking about stages like cryptographic exchange & trading destinations, traders work by buying or selling one type of cash for another or exchange their cryptocurrency into cash.

Major virtual monetary standards and crypto-resources are currently still at the beginning periods of advancement, so we have yet to get to their maximum capacity. 

Why Trade Cryptocurrencies - The Benefits Of Cryptocurrency Trading

Traders can speculate on whether the price of a crypto asset will increase or decrease. And, they don’t have to take ownership of that asset. They can do this through CFDs, spread bets, scalping, position trading, range trading, swing trading and intra-day trading.

 

The benefits of cryptocurrency trading include:

1. Cryptocurrency volatility

2. Cryptocurrency market hours

3. Ability to go long or short

4. Improved liquidity

5. Leveraged exposure

6. Tax-efficient trading 

7. Faster account opening

 

Some of the benefits of cryptocurrency trading include transparency, volatility, security, 24-hour open market, accessibility and low trading fees.

Cryptocurrencies are volatile meaning that their price goes up and down often. Since prices often move high, then trading cryptocurrencies can be really profitable. Traders should speculate on the price of a certain cryptocurrency, without having to own it. They can do this through CFDs, spread bets, scalping, position trading, range trading, swing trading and intra-day trading.

Let’s get started: 

1. Cryptocurrency volatility

Cryptocurrencies are volatile meaning that their price goes up and down often. Since prices often move high, then trading cryptocurrencies can be really profitable. Traders should speculate on the price of a certain cryptocurrency, without having to own it. Although extreme cryptocurrency volatility is seen as a weak point for cryptocurrencies by critics, traders can benefit from it as the price of a crypto asset can rise and fall often, giving opportunities for profits.

2. Cryptocurrency market hours

In contrast to trading stocks and commodities, trading cryptocurrencies doesn't happen only five days a week. Instead, you are able to trade on the market at all times as it is open 24/7 across a growing number of exchanges. This is a great opportunity, especially for part-time traders that have full-time jobs, as they can use their spare time to trade.

3. Ability to go long or short

When going long, you purchase a value at a certain price and sell it at a higher rate as its value increases. The difference between the price of your purchase and the price you sell it at is the profit you make. When going short, you borrow crypto, then you sell it first in the open market, and after that, you buy those shares at a lower price and in this way you profit from the price difference. When trading cryptocurrencies, you will be able to do both.

4. Improved liquidity

When talking about tradable assets, then liquidity is an essential element, and that includes cryptocurrencies. Liquid markets secure a more efficient, deeper and smoother experience when trading. The illiquid market can place traders in situations that are hard to exit. Although forex is considered the most liquid market, cryptocurrencies do not stand badly either, because they are liquid.

5. Leveraged exposure

Leverage is known as using a deposit, otherwise known as margin, that provides you with increased exposure to a particular asset. Simply explaining, you’re laying down a fraction of your trade value and the rest is loaned by your provider. 

In cryptocurrency, CFD trading and spread betting are leveraged products. Therefore, they allow you to open a position on ‘margin’ – a deposit worth only a portion of the trade’s complete value. So, you could gain great exposure to a crypto market, just with a tiny amount of your capital.

6. Tax-efficient trading

If we maintain highly accurate records, we’re accomplishing the most important element of executing an effective strategy regarding tax-efficient cryptocurrency trading. Regardless of how a cryptocurrency investor or trader is generating income from trading, long-term investing, or other means, keeping accurate records is very important as it makes accurate valuation possible. Cryptocurrencies are known to have some advantages when it comes to taxes. For example, spread betting is completely not taxed. There is no capital gains tax (CGT) because you never own an asset.

7. Faster account opening

When trading cryptocurrencies it’s important to save time on tedious tasks relating to your account and focusing only on your crypto trades. Crypto exchanges are known to make the signing up process easy and fast, so you can start trading as soon as possible. 

Also, now there are various tools, claiming to make it possible for you to trade, buy and sell Bitcoin automatically for profit by following the current trends on the market.

The Benefits of Cryptocurrency

But, what are the benefits of cryptocurrency?

Cryptocurrencies have several advantages over traditional financial assets. Here are some of them:

1. Transactions

2. Asset transfers

3. Transactions are confidential

4. Lower transaction fees

5. Greater credit access

6. Easy international trading

7. High-level security

 

1. Transactions

When doing traditional business deals, agents, brokers, and legal representatives can make an otherwise straightforward process more complicated. You have to consider paperwork that has to be done, commissions, brokerage fees, and many other special conditions that may apply to a specific deal.

Bitcoin, Ethereum & Stellar protocol comparison. Source: Stronghold

A very important advantage of cryptocurrencies is that by them being closed deals between two parties that are made on a peer-to-peer network system, the need to go through processes that we go when we use traditional financial systems is immediately eliminated.

This has a big impact on establishing check-ups and less confusion about the amount of the transactions. Moreover, the two parties involved in a transaction each know who they are, bringing, therefore greater accountability.

2. Asset Transfers

The cryptocurrency blockchain has been described by analysts as resembling a “large property rights database”, which can be used to both execute and enforce two-party contracts on automobiles or real estate and other similar commodities. 

However, the blockchain cryptocurrency ecosystem may also find their use in facilitating specialist modes of transfers. And, considering that you as a crypto holder govern your account, it will take significantly less time to make the transfer of the assets.

3. Transactions Are Confidential

In traditional systems, banks or credit agencies that are involved in your transactions can make a reference document of your entire transaction history, each time a transaction is made by you. Therefore this may be a concern regarding your own privacy. Simply explained, this might mean regular checks on your account balances are being made in order to be able to ensure the availability of sufficient funds. When making important business transactions, they may require a more thorough examination of your financial history.

The fact that the transactions that you make are unique exchanges that involve two parties which have negotiated and agreed upon the terms in each respective case is another valuable advantage. In addition, the information exchange is done on a “push” basis, which makes it possible to be able to transfer exactly the amount you want to send to the recipient, making for a very fast and reliable exchange method.

This also plays a very important role in guarding the privacy of your personal financial history and it also serves as a protection from the threat of identity theft or account theft, which under the traditional system has shown to be way greater, as the safety of your personal information when making a transaction is available and can be leaked at any point in the transaction chain.

4. Lower Transaction Fees

It is very likely that you have stumbled upon your monthly account statements from the bank or credit card company while reading the information they provide, and you were surprised by the level of fees that they impose for transferring funds, writing checks, or any other financial transaction that can be involved. Transaction fees can significantly lower your assets, more so if you are making a large number of transactions in a month.

Bitcoin & Ethereum average transaction fees. Source: Logos Network, Medium

Third-party service management may charge you fees to maintain your crypto wallet, but these charges will be way lower than the ones that would be imposed by traditional financial systems.

5. Greater Credit Access 

The media that is doing so much in facilitating the cryptocurrency exchanges are digital data transfer and the internet. So anyone who possesses a viable data connection has all of these services potentially available to them, they just need some knowledge about the cryptocurrency networks that are on offer, and ready access to websites and portals that are relevant to the network.

About 2.2 billion individuals across the globe use the internet or mobile phones. However, many of them don’t have access to traditional banking systems. With cryptocurrencies, they could have easier access as they are totally decentralized and internet-based. So it would be much easier for people to make transfers.

6. Easy International Trading

Although at present times this is largely unrecognized as legal tender on national levels, cryptocurrencies are not subject to charges on transactions, interest and exchange rates, or other measures that are imposed by specific countries due to their specific respective laws on the matter.

And by using the peer-to-peer mechanism that is present in blockchain technology, international transfers and transactions can be conducted minus the complications over fluctuations regarding currency exchange, among other things.

7. High-Level Security

In contrast to transactions allowed by credit card companies which can be reversed as in the case of the “charge-back”, once a cryptocurrency transfer has been authorized, there’s no way it can be reversed. This is a protective measure taken against fraud that requires a specific agreement between a buyer and seller to be made when regarding the refund policy in the case of a mistake or general policies that deal with returns.

Should You Buy Or Trade Cryptocurrencies?

Before deciding to get into the world of cryptocurrencies you must know that trading and investing are two different things. If you need help to understand things more in detail in this regard, take a look at this detailed article

You might be interested in buying cryptocurrencies if…

  • You accept to pay taxes on any gained profits
  • You are able to pay for the asset upfront
  • You want to be part of people who own cryptocurrencies
  • You don’t get bothered by introductory limits or maximum deposits
  • You are patient to wait for an exchange account before selling or buying
  • You don’t mind fees for deposits or withdrawals
  • You want to be part of all the HODLers around the world

You might be interested in trading cryptocurrencies if you…

  • You want to speculate on their prices without owning the asset
  • You are contemplating to gain exposure to multiple exchanges from the same account
  • You want your position leveraged so that you put up much less than the cost upfront
  • You don’t like paying deposit or withdrawal fees
  • You have a burning desire to start trading right away
  • You don’t want to have a maximum deposit limit

eToro – The Best Cryptocurrency Platform For Both Traders and Investors

eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.

Virtual currencies are highly volatile. Your capital is at risk.

Key Points:

  • Some of the main benefits of cryptocurrency trading include transparency, volatility, security, 24-hour open market, accessibility and low trading fees.
  • Cryptocurrency transactions have a significant advantage, as they are closed one-to-another affairs that happen on a peer-to-peer networking structure.
  • There is no possibility of the leakage of personal exchange history info.
  • The cryptocurrency ecosystem has a valid potential to make asset transfer and transaction processing available for trading to interested consumers.
  • Once a cryptocurrency transfer has been authorized, there’s no way it can be reversed. This is a protective measure taken against fraud.
  • The biggest advantage of cryptocurrency is that you are the sole owner of the corresponding private and public encryption keys responsible for making up your cryptocurrency network identity.
  • The media that is doing so much in facilitating the cryptocurrency exchanges are digital data transfer and the internet.

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