Crypto trading involves the speculation of price movements with a trading account or buying and selling the underlying coins through an exchange. In this beginner’s guide we will have a look at the decentralized platform Ethereum, which has adopted the blockchain technology established by bitcoin and expanded it to meet a wide range of other applications.
This guide is for the beginner with no or few knowledges within the crypto trading world. A guide for you who wish to dive deeper into the phenomenon and master the act of trading with cryptos. Remember that Ethereum trading, crypto trading and any kind of trading is not without its risks. Make sure you are aware of these risks before you start trading.
What is crypto trading?
Trading is the act of making money when prices on currencies vary. This is something that has become very popular with cryptocurrencies such as Bitcoin and Ether. When trading with cryptos like ether and Bitcoin, you speculate the price movements of currencies with a specific CFD trading account or buy and sell the underlying coins through an exchange.
If you go for a CFD trading account, you are allowed to speculate in the price movements of a particular cryptocurrency without being the owner of the underlying coins. In other words, you can either buy if you think the crypto will increase in value or sell if you believe it will decrease. If you choose to buy and sell cryptos through and exchange, you buy the underlying coins themselves. This crypto trading is considered a bit riskier, because you need to understand the complete technology within cryptos. But also, because the potential for loss is bigger than the potential for profit. Before you get started, here’s a few tips to follow.
What is Etherum and how is it used?
Etherum is a digital platform that uses the same blockchain technology as bitcoin. Etherum uses the cryptocurrency ‘ether’ which is the basis of the network. This platform was established in 2015 and has since day one increased in popularity. It is simply a decentralized program with which the cryptos Ether (ETH) can be used for transactions. Similar to bitcoin, Ether is free from government intervention.
Like other cryptocurrencies, transactions with Ether are recorded in a digital ledger, which is public and transparent – the so called blockchain technology. Clusters are verified of the transactions to create so called “blocks” and secure them by solving algorithms. New blocks are linked to the chain of the previous block, thereby the name “blockchain”, where the winner earns a “block reward”, that is a specified number of the ether currency.
If you are familiar with the bitcoin blockchain already, Etherum will probably not be difficult to understand. The difference between them both is the programming language that enables programmers to write programs in which the blockchain’s transactions handle and automate specific results, also called smart contracts. These contracts ensure that terms are met by coding them, and by automatically finishing an agreement when the terms are met, a transaction can be executed without delays and cost. Aspects that make crypto trading like Etherum trading very appealing.
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