What are Cryptocurrencies
Traders across the United Kingdom can now enjoy full access to a wide range of cryptocurrencies at AvaTrade. Cryptocurrencies, a.k.a. digital currencies, can be traded 24/7, and they also serve as an attractive investment option for clients. These are decentralised, anonymous, and independent financial assets. This new-age technology allows anyone to buy/sell, trade or invest without banks or intermediaries. It should be noted that digital currencies are extremely volatile, but can be a lucrative addition to your investment portfolio.
Cryptocurrencies exist only on the Internet. There are no physical stockpiles of digital currencies – since they are not fiduciary currencies like the GBP, USD, or EUR. Since they exist as digital assets, they are essentially a series of ones and zeros in complex algorithmic blockchain networks. It is the blockchain network and the technological innovation that makes digital currency so valuable.
Bitcoin was the world’s first digital currency. It is represented by the ticker BTC. It is also the benchmark against which all other digital currencies are measured. Other popular digital currencies include Litecoin (LTC), Ethereum (ETC), and Bitcoin Cash (BCH). The most highly valued coins on the market are currently Bitcoin and Ethereum, although significant volatility in prices can change weightings and rankings overnight. Multiple other coins also exist, in the form of Ripple, Ethereum Classic, NEO, Monero, Dash, and others. At the time of writing, there were some 1,300+ cryptocurrencies spread across thousands of markets.
Why trade cryptocurrencies with AvaTrade UK
AvaTrade is a fully licensed and regulated broker. We offer clients zero commissions on transactions, and highly competitive spreads. When you trade cryptocurrencies, you’re simply trading on price fluctuations, based on speculative sentiment, demand/supply, and other economic criteria. No actual purchase of the underlying cryptocurrency takes place at the AvaTrade UK website. These are known as derivatives trading instruments, i.e. cryptocurrency CFDs. When you trade cryptocurrency with AvaTrade, you are in safe hands at all times. There are many reasons to trade cryptocurrency at AvaTrade:
- Enjoy charts and live quotes
- Start trading crypto with just £100
- Cryptocurrency pairs can be shorted
- Competitive swap rates
- Enjoy access to multiple leading cryptocurrencies
- AvaTradeGO for Mobile Traders, and MetaTrader 4
- 20:1 leverage on crypto trading
- 24/7 customer support in 14 languages
Trade king crypto Bitcoin as well as Bitcoin Cash, Ethereum and Litecoin on AvaTrade’s MT4 platform and the AvaTradeGO app.
What Cryptocurrency Coins Are Available?
Bitcoin is the world’s premier cryptocurrency. It opened the gates for 1300+ other cryptocurrencies that populate the digital currency market. Bitcoin is the world’s leading cryptocurrency, and its total supply will be capped at 21 million coins. When it was introduced, $USD1 was the equivalent of 1309 Bitcoin. The wheel has come full circle, and Bitcoin breached the $20,000 barrier in December 2017. At the time, 1 BTC was worth 20,000 USD. The creator of Bitcoin (a person, an institution, or a group of people) known as Satoshi Nakamoto would be rightly proud of this phenomenal achievement.
Ethereum is so much more than a cryptocurrency. It is the equivalent of a supercomputer with scores of other computers operating globally. It is a sophisticated blockchain capable of responding to complex requests. Ethereum can store cutting-edge computer programs, boosting its functionality over Bitcoin in many ways. Big banks around the world have started using the Ethereum blockchain network for processing international payments. By December 2017, the price of Ethereum spiked 1,000%.
Ripple has surprised cryptocurrency traders in a big way. It is a next-gen payment network with far-reaching implications. It was designed for use with the financial industry. Over the years, Ripple has gained widespread acceptance as both a leading technology and a top-tier digital currency. Its recent explosive growth resulted in it displacing Litecoin and Ethereum from the top 3 leading cryptocurrencies. For example, it rose 71% in price in just 1 day, and it is a hot favourite among Asian traders.
Dash is one of the most popular cryptocurrencies on the market. Some compare it to Bitcoin and regard it as a Bitcoin 2.0. In fact, this cryptocurrency was created to offset some of the problems inherent in Bitcoin. For example, the development team behind its creation implemented greater anonymity and faster transactions processing to make it a better alternative to Bitcoin. Its name is an indication of how fast it is.
Litecoin is similar in many respects to Bitcoin. It’s also one of the oldest cryptocurrencies on the market. The differences between LTC and BTC are stark however. These relate to the total supply and the speed of transactions processing. For example, Bitcoin blocks can be created in approximately 600 seconds, while Litecoin blocks can be created in just 150 seconds. Since Litecoin is four times faster than Bitcoin, you can process transactions that much quicker. The cryptography inherent in Litecoin is highly complicated. This makes it difficult to mine compared to other cryptocurrencies.
Other popular cryptocurrencies that have taken the world by storm:
Monero is a relatively new cryptocurrency. It was created in April 2014 and its focus is on scalability, privacy, and decentralisation. It is an untraceable digital currency system with guaranteed security. It uses a unique form of cryptography that ensures that all transactions in the network are untraceable and unlinkable in any way. The derivations of the name are Esperanto, meaning coin.
NEO was the first fully decentralised blockchain network launched in China, back in 2015. It is open source cryptography, and it uses an algorithm similar to the Ethereum model. It functions along similar lines as other blockchain networks, with full digitisation of multiple assets, and full support of decentralised commerce
Focused on providing secure data communication and payments online, IOTA (IOTA) is one of the “new generation” coins that aim to develop the decentralized blockchain technology even further than its predecessors. IOTA blockchain has no “blocks”. Instead, it uses a system called “Tangle” which allows free and instantenous transactions. Its system can handle unlimited transactions and is overseen by the IOTA Foundation, a non-profit for maintaining the cryptocurrency as a license-free technology
Zcash (ZEC) is a cryptocurrency which grew out of the Zerocoin project in 2016, aimed at giving crypto users a greater level of privacy and anonymity. Zcash payments are published on a pubic blockchain, giving users the option to hide some features of identity such as fund sender, recipient and amount.
There is a fixed total supply of 21 million mined units (same as Bitcoin), 10% of which will go to Zcash’s stakeholders (founders, employees, advisors etc.).
Qtum (QTUM) was developed by the Singapore-based foundation and is an open source blockchain project. It combines a modified Bitcoin Core infrastructure with the Ethereum Virtual Machine (EVM).
By combining the two best parts of each, it is the merged toolkit for building trusted decentralized applications geared towards a business friendly blockchain. Those following the digital currency can now agree on a platform that offers direction.
Cryptocurrencies, or digital currencies, are encrypted currencies that can be transferred between peers. Since they are not governed by the central bank or any government entity, they are deemed decentralised. Cryptocurrency comprises a sequence of encrypted algorithmic codes that can be transmitted over a network. A public ledger stores and confirms all transactions that are conducted. The blockchain technology of cryptocurrencies makes use of sophisticated techniques for certification and validation purposes.
The absence of regulation for cryptocurrency has led to high volatility in this market. It is possible to generate substantial profits in double-quick time, but huge losses are equally possible. The lack of regulation is partly responsible for the relatively low rates of adoption in e-commerce, among corporations, and between individuals.
There is a finite number of digital coins – cryptocurrency – that can be created. This was highlighted earlier. With Bitcoin, that number is capped at 21 million BTC, after which no further Bitcoin will be produced.
The pricing structure of digital currencies is dependent on a host of factors, mainly supply and demand among speculators. Other factors that can dramatically influence cryptocurrency prices include media coverage, news events, statements from corporate CEOs, government ministers, and cryptocurrency markets such as South Korea, Japan and China. As more people across the UK and elsewhere trade cryptocurrency, its price tends to rise. The unpredictability of cryptocurrency is exciting for traders. Discussions on how best to create a trading framework for cryptocurrency can affect prices in a big way.
Who created the cryptocurrencies
In 2009, an individual, or group of people, by the name of Satoshi Nakamoto created a decentralized cash and coin system without a central unit. This is how Bitcoin was created. It is the world’s first cryptocurrency. All activity that takes place with Bitcoin – trades, mining, purchases etc. – is recorded on the master ledger known as the blockchain. The master ledger needs to validate ownership for all these transactions. All transactions that are concluded on the blockchain – the master ledger – are final. It takes a few minutes for these transactions to be verified. While they are processing, neither the sender nor the receiver can do anything with the Bitcoin. This is designed to prevent double spending from taking place. No fraud, manipulation, or replication of Bitcoin transactions is possible.
Each cryptocurrency user has a digital wallet. It contains specific information that confirms that person as the owner of the specific digital currency. A digital wallet makes it possible to send/receive cryptocurrency, and it also acts as a personal blockchain ledger for all online transactions that take place. These wallets are designed to be ironclad, but it may be necessary to implement additional security protocols and encryption technology to keep them that way. It is possible to store digital wallets in an external hard drive, in the cloud, or an internal hard drive.
The cryptocurrency miners maintain records for the digital community. They use sophisticated technology to create new coins, and verify the blockchain network.
Why trade cryptocurrency
UK traders have many reasons to get involved in the cryptocurrency market. For starters, these digital currencies are the hottest financial instrument to hit the scene. Though they’ve been around for several years, they have recently exploded in popularity. They have a limited supply, and source codes clearly indicate how much can ever exist of each cryptocurrency. There are significant differences between fiduciary currency and cryptocurrency. For starters, government has no control over the supply of cryptocurrency. Banks are unable to freeze your account, for any reason, and governments can don’t own it. These finite commodities are similar to traditional commodities which are also limited in supply. In theory, their rarity can drive up their prices.
It is important to point out that governments and their tax authorities have control over the banks. This is not the case with cryptocurrency. The tenets of digital currency are anonymity and privacy. These features of Bitcoin and Altcoin are highly appreciated by UK traders, investors and speculators. It is certainly more difficult to pinpoint the identity of account holders, but the more pertinent issue is the minimal cost involved in using cryptocurrency for transactions purposes. Cryptocurrency is cheaper and more efficient than banking transfers.
Cryptocurrencies have the capacity to upend convention in the financial world. Presently, it’s a work in progress. There are many limitations in the digital currency market, and users of cryptocurrency should be aware of them. High levels of volatility, the potential for regulation, and security threats remain.
Thanks to the highly complex cryptocurrency code, this new financial transmission mechanism is near impossible to counterfeit. Investing and trading cryptocurrency is certainly an exciting prospect, but it’s not without its risks. The long-term implications of cryptocurrency trading remain unknown, but the technology itself is being adopted across the board. Truth be told, cryptocurrency is here to stay, and it will likely prosper in the years to come.
Please see our crypto Trading Conditions page for available cryptocurrencies.