NEW ZEALAND – Guest Writer –The third in the series of “How to Bitcoin” articles introducing you to Bitcoin and what you can do with the cryptocurrency. Here is an overview of the buying and selling aspect of Bitcoin, trading.
BTC can be traded on Exchanges (online companies regulated/non-regulated and are located all over the world) to buy other alt-coins. Exchanges may also trade commodities and currencies. Some large BTC Exchanges that mostly trade against the US dollar are Bitstamp, Coinbase, and Bitfinex.
Click here to view the BTC Markets
Common commodities include Gold, Silver, Copper, Oil, US$ (any currencies) and are as easy to trade as just buying or selling BTC.
BTC can be traded in all currencies but is the most popular and bought in US dollars (followed by the Japanese Yen, Korean Won, Chinese Yuan and Euro). All Exchanges trade with BTC as this is the ‘gateway’ to buy altcoins and crypto-assets.
As these online companies may not be regulated there is a risk of losing your funds. With all Internet-based businesses a risk of hacking, inside job of stealing, cyber attacks can cause you to misappropriate your investments.
Peer-to-Peer trading of BTC is called OTC (over-the-counter). OTC is facilitated directly between two parties or with the use of a platform called LocalBicoins.com. This website connects buyers and sellers locally.
Some wallets (not core BTC wallet) can provide a platform where you can trade securely, and it is recommended never to keep funds on Exchanges just to store BTC/alt-coins. Use exchanges for what they re intended, to buy and sell cryptocurrency. One of the most important things to remember is that it is best practice to own your private keys vs an exchange holding them. A private key is a secret number that allows bitcoins to be spent and for this reason, needs to be kept secure, preferably by you. More on storing BTC coming up in the next article.
You can liken Exchanges to Banks, but don’t confuse a Banks’ reputation with an Exchange. Exchanges may not always be honest and have the risk of being hacked. As Bitcoin is mostly unregulated taking an Exchange to court, which is located overseas may not result in a good outcome.
There is, however, reputable Exchanges with examples including Coinbase, Bitstamp, Cryptopia, Gemini, and Binance. There are more available to trade on but careful thought to market volume, legitimacy and Knowing Your Customer (KYC) rules need to be considered before using any service.
Buying your first BTC means you have taken a step into the new digital economy… smile and take a selfie… and keep learning.
More in the “How to Bitcoin” series:-
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How can we make money?
Electronically Processing BTC- Mining
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