Cryptocurrencies are an exciting and unique investment opportunity that continues to gain popularity year after year. You’ve likely heard of cryptocurrency before in reference to Bitcoin (the first cryptocurrency released in 2009 and still considered the most popular option). If you’ve been thinking of starting to invest or looking to expand your portfolio, then investing in cryptocurrencies may be the route for you.
Before starting, it’s best to inform yourself about cryptocurrency, what it is, how to invest in it, and the potential risks and rewards for this investment type.
What Are Cryptocurrencies?
Cryptocurrencies are a form of digital assets that run on a particular network. Because they run off a decentralized structure (the extensive network is amongst multiple computers), cryptocurrencies are outside the realm of a central authority. In other words, cryptocurrencies are like a secured online payment form that is represented by ledger entries.
The decentralized structure is known as a blockchain system. Blockchains are what make records and manage the transactions that take place in the cryptocurrency virtual world. It is this system that creates the appeal in cryptocurrency as it’s considered to be highly secure.
What is Cryptocurrency Trading?
Cryptocurrency trading is no different than other forms of investments. The purpose is to buy and sell for profit. Doing so does involve you speculating the potential price movement of the cryptocurrency you’re trading. That’s when a broker can come in handy.
How Do You Buy Cryptocurrency?
As with most types of investment, you’ll need a platform to buy and invest in cryptocurrency. You can look at the variety of ECN brokers and find a platform that best suits your needs. Before starting, you’ll want to ensure that you’re allowed to trade and regulate your platform for investments. Not doing so could land you in hot water.
Another option to consider is using a broker. Going this route could be beneficial for newer investors. The world of investing, especially with cryptocurrency, can become overwhelming and confusing. Using a broker can help you understand what’s going on and make decisions in your best interest. However, when looking for a broker, ensure you’re using a regulated broker (use this list of forex brokers in Australia).
Is It Legal to Trade Cryptocurrency?
The legality around cryptocurrency has long been debated since it was first formed in 2009. There are many reasons for and against regulating this market. In a 2017 statement, the Australian government referred to trading cryptocurrency as legal, but those partaking should be aware of possible tax implications.
You’ll want to familiarize yourself with trading and taxation laws in Australia before starting, so you don’t get hit with any fines or worse. Once you’re ready to go, then you can find your trading platform, decide on your trading strategy, pick your currency and take your chance at winning big with each cryptocurrency trade.
Cryptocurrency trading is very volatile, which means there is a higher risk involved. However, as experienced traders already know, the higher the risk, the higher the reward.
