First, let’s look at the similarities between the securities available on a traditional stock trading platform and those available on a cryptocurrency exchange site.
You can loosely think of each offered coin as a stock, of sorts. As traditional stocks are shares in a particular company, so individual crypto coins are one share of currency in the total pool of available currency. They do not confer ownership in the company behind them, however. Owning one Bitcoin doesn’t give you one share of ownership in the legal and financial entity that is Bitcoin, any more than owning one U.S. dollar gives you one share of ownership of the U.S. government.
The price of each coin can move, just as the price of stocks can move. The answer to the question, “What is Bitcoin trading at?” changes each second. These Bitcoin price fluctuations are where many traders make their money, either by using Bitcoin trading software or some other cryptocurrency trading platform.
Initial stock offerings, or ISOs, are known as initial coin offerings, or ICOs, in the crypto sphere.
Now, let’s look at the difference, beginning with those ICOs. The issuance of stocks and other traditional securities is tightly regulated by the U.S. Securities and Exchange Commission. The commission has only recently begun to take an interest in ICOs, and it is not entirely clear that all cryptocurrencies on all cryptocurrency trading platforms qualify as securities. This means the space is largely unregulated, and so the protections inherent in the traditional market are absent. Crypto traders should beware scam projects and pump-and-dump schemes, among other irregularities that have long since been chased out of traditional markets. This requires an additional level of care and the use of a quality cryptocurrency platform.
Traditional securities traders have to jump through a number of legal hoops in order to meet know-your-customer (KYC) requirements. At this early stage in the development of the Bitcoin and altcoin markets, KYC requirements are simply beyond the reach of most developers.
When a company approaches an ISO to raise capital, it typically already has a corporate structure supporting it. That means cash on hand, attorneys, accounts, and all the other relevant machinery that keeps a company moving forward.
Cryptocurrency developers are more likely to be a small group of volunteers, perhaps operating outside of the United States. In fact, the vast majority of altcoin developers do not come from the corporate world. They handle much of the coding and setup of the new coin internally, with the goal of holding an ICO to kick-start investment. Regulation would substantially raise the barrier for entry.
So, the best trading platforms for cryptocurrency tend to mitigate the risk of working in an unregulated market by developing a robust security architecture and possibly providing some measure of insurance.
This is the next key difference between traditional stock trading and using Bitcoin trading platform software. Bitcoin and other altcoins operate via blockchain technology. Without getting too technical, this simply means that Bitcoin’s tech is decentralized. That is, the Bitcoin platform network exists as a distributed ledger, spread among its users. There is no single bank or financial institution acting as a central middleman or arbiter. When you get into digital trading, there are very few people standing over your shoulder. This provides a level of anonymity and security by default, as your funds can be withdrawn from a cryptocurrency trading platform to individual wallets. In short, you don’t need to involve another institution to pull your gains off of an exchange – where they might potentially be hacked, lost in an exchange collapse, or examined by government entities. You just need access to a computer and your private wallet key.
For the trader, this offers a considerable advantage over traditional markets. There are no brokers to pay, and transaction fees are minimal because the overarching architecture is so stripped down. Trading digital currencies allows you to reach out across political and geographic borders without the (sometimes comforting) red tape of a traditional market.
A word about volatility. In the traditional trading world, gains and losses are relatively modest due to the size of the market, regulation, and the experience of the individuals operating within. This all goes out the window when you dip your toe into digital currency trading. Big swings, up and down, are one of the defining features of this early market. In fact, that’s one of the biggest draws surrounding for cryptocurrency exchange sites. In the early days of Bitcoin, a few coins could be had for pennies. A single Bitcoin just recently cracked $9,000. The potential for gains is enormous. The flip side of that particular digital coin is that the potential for losses is also enormous. After reaching all-time highs in January, the cryptocurrency market entered a prolonged downturn that has only recently begun to reverse itself. Some coins lost more than 80 percent of their January value.
If you’re comfortable with the idea of trading in a high-potential, high-risk market, your next question will likely involve finding out where to trade Bitcoin or other digital currencies.
There are a number of firms currently offering Bitcoin trading. Zeon is a mover and a shaker in that space and the best trading platform for cryptocurrency. Our platform is connected to many cryptocurrency exchange, that offer coin trading. That will allow you to take your Bitcoin technical analysis and turn it into an investment in the future of this promising technology with our trading terminal.
Bitcoin trading is both similar to traditional trading and a world of its own. Realize your potential with Zeon’s crypto exchanges and crypto trading capabilities. Learning how to trade cryptocurrency begins with Zeon.io.