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Cryptocurrency Trading and How it Works? A Beginner's Guide

Cryptocurrency trading defined as the buying and selling of digital assets with the help of an exchange platform. Cryptocurrencies are decentralized digital currencies that use encryption techniques for security of the transactions and also control the creation of new units. First of all you have to select a creditable cryptocurrency exchange platform that offers the desired cryptocurrencies. When you will create an account, you have to fund it with mandate currency or other cryptocurrencies. Once the account is funded, you can start buy or sell orders on the exchange.

    When placing a buy order, you will specify the amount of cryptocurrency you want to purchase and the price you are willing to pay for it. If your order matches an existing sell order on the exchange, the trade will be executed, and you will receive the purchased cryptocurrency. When placing a sell order, you will specify the amount of cryptocurrency you want to sell and the price you are willing to sell it. If your order matches an existing buy order on the exchange, the trade will be executed, and you will receive the mandate currency or other cryptocurrency in exchange.

Cryptocurrency prices can be extremely volatile, so it is important to stay informed about market trends and to having a deep understanding of the basic factors that can affect the market.

List of Cryptocurrency used in Trading

There are thousands of cryptocurrencies in circulation, but some of the most commonly traded cryptocurrencies are:

  1. Bitcoin (BTC): Bitcoin is the first and most well-known cryptocurrency. In 2009, Bitcoin was created by an unknown person or group using the pseudonym Satoshi Nakamoto. Bitcoin is a decentralized digital currency Which allows for secure transactions. Bitcoin operates on a peer-to-peer network. It has supply cap of 21 million units an current circulating supply of approximately 18.6 million units.
  2. Ethereum (ETH): It is the second-largest cryptocurrency which was created in 2015 by Vitalik Buterin and allows for the creation of smart contracts and decentralized applications (DApps) through its blockchain. Ethereum's native cryptocurrency is called Ether, which is used to pay for transactions on the Ethereum network.
  3. Binance Coin (BNB): Binance Coin is the one of the largest cryptocurrency exchanges in the whole world. It was created in 2017 by Binance and can be used to pay trading fees, withdrawal fees, and other services on the Binance platform. Binance Coin also allows the users to participate in token sales and other events hosted by Binance.
  4. Cardano (ADA): Cardano is a blockchain platform that was created in 2017 by IOHK, a blockchain research and development company. The aim of cardano is to provide a secure and scalable blockchain through its unique algorithm called Ouroboros. Cardano's native cryptocurrency is called ADA is used for transactions on the Cardano network.
  5. Dogecoin (DOGE): It  was created in 2013 as a joke based on the popular "Doge" meme, it gained popularity and has been used for various charitable causes. Dogecoin has a high supply cap than Bitcoin, with a maximum supply of 129 billion units, but it is frequently highly volatile.
  6. XRP:XRP is the native cryptocurrency of the Ripple network, a blockchain-based payment system that aims to provide fast and low-cost cross-border transactions. XRP is used to facilitate transactions on the Ripple network and can also be used for  micropayments.
  7. Polkadot (DOT): Polkadot is a blockchain platform that was created in 2020 by Gavin Wood. It allows for the creation of blockchains that can communicate with each other, enabling more efficient and scalable blockchain applications. Polkadot's native cryptocurrency is called DOT, which is used for transactions and governance on the Polkadot network.
  8. Chainlink (LINK): Chainlink is a decentralized oracle network that provides real-world data to blockchain applications. It aims to bridge the gap between the smart contracts and real-world events.
  9. Litecoin (LTC): Litecoin is a cryptocurrency that was created in 2011 by Charlie Lee, a former Google engineer. It is often referred to as the "silver to Bitcoin's gold" and is designed to be faster and more efficient than Bitcoin. Litecoin has a maximum supply cap of 84 million units and is often used for small transactions and micropayments.
  10. Bitcoin Cash (BCH): Bitcoin Cash is a cryptocurrency that was created in 2017 as a result of a hard fork from Bitcoin. It aims to provide faster and cheaper transactions than Bitcoin through larger block sizes. Bitcoin Cash has a maximum supply cap of 21 million units, the same as Bitcoin, and is often

These cryptocurrencies are often available for trading on various cryptocurrency exchanges and can be bought and sold against other cryptocurrencies or fiat currencies like USD, EUR, or GBP. However, it's important to note that the popularity and availability of cryptocurrencies can vary depending on the exchange and the region.

Pros of cryptocurrency Trading :

  1. High potential for profit: Cryptocurrencies are highly volatile and can experience large price variations in a short period of time, which presents opportunities for traders to make great profits.
  2. Decentralized nature: Cryptocurrencies are decentralized, means that they are not controlled by any government or financial institution. This provides great freedom and privacy for traders.
  3. Accessibility: Cryptocurrency trading is more accessible than traditional trading, with low conditions to entry and there is no need of intermediaries like brokers or banks.
  4. 24/7 trading: Cryptocurrency markets runs 24/7, which allows the traders to buy and sell at any time, unlike traditional markets that have specific trading hours.

Cons of cryptocurreny Trading:

  1. High risk:  Cryptocurrencies are highly volatile and can experience large price variations in a short period of time, which can lead to significant losses for traders.
  2. Lack of regulation: Cryptocurrencies are largely unregulated, which can make them more unsafe and manipulation.
  3. Security concerns: Cryptocurrency exchanges and wallets can be unsafe, which can result in the loss of funds.
  4. Limited acceptance: Cryptocurrencies are not widely accepted as a means of payment, which can limit their usefulness in the real world.
  5. Complexity: 
  6. Cryptocurrency trading can be complex, with a expensive learning for beginners and a constantly grow landscape that can be difficult to navigate.

Overall, cryptocurrency trading can be a high-risk, high-reward trading type that requires deep understanding and risk management. It may not be suitable for all investors, and it's important to do deep research and get professional advice before getting started.

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