Trade with Bitcoin using CFD
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The popularity of Bitcoin as both a trading instrument and payment currency in Nigeria seems to not slow down. It is everywhere on the news and everyone seems to have an option as to it fall or rise. But what is actually Bitcoin and how can it be traded? In this article we give you the background to its creation and how to trade Bitcoin with CFD.
The history of Bitcoin
Bitcoin as a fully electronic currency started in 2009 and was designed through a series of white papers written by the pseudonym Satoshi Nakamoto and actually no one knows who he is in real life. Bitcoin is run what is called a decentralised system called a block chain which means that no single individual, organisation or government has access to modify the price, distribution and sale of the cryptocurrency. The ledger inside of the blockchain keeps constantly updated records of all transacted Bitcoins and is fully anonymised so that the true identifies of the sellers and buyer can never be identified. There are no physical Bitcoins issued, instead so called miners can earn new bitcoin by independently verifying Bitcoin transactions in the block chain.
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Bitcoin has become popular in most African countries that have seen its currency weakened by political and economic unrest and is, in some respect, regarded as a safer value holder then some African currencies issued by governments. Since it is free to transfer, sell and buy Bitcoin it has also become a popular method of transferring funds between family members, friends and companies unlike for example Western Union that charges a heavy fee for its transfer service.
Bitcoin can essentially be traded in two ways, either you buy and hold actual bitcoins (which requires you to access a bitcoin exchange and have a bitcoin wallet of some kind) or if you are only interested in speculating of the price movement of Bitcoin, you trade it through a derivate product such as CFD’s that does not hold the underlying asset physically. In this article we are going to focus on the later and see how Bitcoin can be traded using a CFD.
Trading Bitcoin with CFD
LCFD’s for Bitcoin make up excellent trading opportunities for short- to medium-time investors since the price volatility is very high. Actually trading CFD’s for Bitcoin is just like trading any other CFD for any other asset; you just open a trading account and take a position if the price will go up or down. If you use a Buy order you will make a profit if the price goes up and if you use a Sell order, you will make a profit if the price goes down. With CFD’s you can also leverage your Bitcoin trade to use a low margin to buy increase your trade size. Trading Bitcoin with CFD’s is by far the easiest and most profitable way to trade the cryptocurrency if you are only interested in speculating on its price and do not need Bitcoin to purchase things.
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