What are Cryptocurrencies
A cryptocurrency is a digital coin, designed to be transferred between people in virtual transactions. Cryptocurrencies exist only as data and not as physical objects; you cannot actually hold a Bitcoin in your hand or keep Ethereum in your safe. Owning a Bitcoin means you have the collective agreement of each and every computer on the Bitcoin network that it is currently owned by you and – more importantly – that it was legitimately created by a miner. AvaTrade is an industry-leading broker with some of the best trading conditions available, including the lowest crypto spreads on the market.
Start trade crypto with an amazing welcome!
Our risk-free demo account up to $100K!
What cryptocurrency miners do
Cryptocurrencies are handled like cash but are mined like gold. Mining is simply the process of verifying a crypto transaction. People around the world transfer e-coins from wallet to wallet, while miners use computer-processing power to maintain the blockchain and verify these transactions.
When a new crypto is launched, its founders announce how many coins will be mined. Once the quota is reached, no further coins can be produced. The first digital coin introduced was Bitcoin, which remains today the benchmark for all other digital coins. Among other currencies that have made their way into the cryptocurrency hall-of-fame we have: Ethereum, Ripple, Litecoin, NEO, EOS, Stellar Lumens and a number of derived currencies, including Bitcoin Cash and Bitcoin Gold.
Cryptocurrency Dividends
While many of the most popular cryptocurrencies use the Proof-of-Work consensus mechanism that’s explained above, not all of them use this method. There are a number of blockchains that rely of variations on the consensus mechanism known as Proof-of-Stake (PoS). Proponents of the PoS consensus method point out that it is far more environmentally friendly since it does not use computing power to validate blocks.
Instead it has a group of validating nodes, anywhere from 21 to 100 in most cases, that do all of the transaction validation and creation of blocks. These nodes are selected through voting, with each token representing one vote for the node. In some PoS forms the nodes with the most tokens are elevated to validating nodes. In these blockchains token holders are able to delegate their tokens to a specific node to increase the nodes total number of tokens. The token holder does not give up their ownership of the tokens, but simply their voting rights.
The validating nodes receive all the block rewards when creating a new block, but they will also share them with other token holders who have voted for them or delegated their tokens to allow the node to become a validating node.
All these PoS blockchains allow for staking or delegating tokens, and those who choose to do this are rewarded with some of the block rewards. In this way a Proof-of-Stake token is like a dividend bearing stock in that it makes regular payments to holders of the token. The more tokens staked, the larger the reward or dividend. Unlike dividend bearing stocks, which may make a payment annually or quarterly, many of the PoS blockchains make their payments weekly, daily, or even hourly.
Blockchain – The Technology Behind Cryptocurrencies
Unlike traditional transactions, cryptocurrency transfers are not handled by banks or other financial institutions. Every time someone pays via e-coin, his payment is recorded on a digital ledger called the blockchain.
What is Blockchain
A list of transaction records, called blocks, which are linked to each other and encrypted. The blockchain is continuously growing and is completely open to anyone. Each block in the blockchain contains:
- 1.The details of the sender, receiver and amount of e-coins.
- 2.A hash, which serves as a unique fingerprint.
- 3.A hash of the previous block in the chain.
When a new block is created, it is sent to all the users in the network. Each user then verifies the block and it is added to the blockchain.
Each one of the numerous cryptocurrencies existing today has its own blockchain, and the complex math that is at the heart of the blockchain is computer generated. In order to run a transaction on the blockchain you need an e-wallet (or cryptocurrency wallet).
What is Tangle
The biggest problem of the Blockchain is its reliance on miners. This is exactly why the cryptocurrency called IOTA (the Internet of Thigs Application) was created in 2016. IOTA also battles increasing transaction fees and network scalability. IOTA’s blockchain is called Tangle. It is a blockchain with no blocks and no chains. In this system, the users themselves are responsible for validating transactions. This means there’s no need for approval from miners; so users enjoy a fee-free transaction and an increased process speed.
Start trade crypto with an amazing welcome!
Our risk-free demo account up to $100K!
What is a cryptocurrency wallet
A piece of software or hardware that gives you the ability to store and exchange your cryptocurrencies. Each cryptocurrency wallet is encrypted and unique. When you send funds you actually broadcast an encrypted message to the recipient. Only the recipient’s cryptocurrency wallet can decrypt that message and thus receive the funds. A hardware cryptocurrency wallet is considered to have key advantages over other software wallets:
- It is immune to viruses or malware
- Its private keys are not exposed to your computer
- Does not require an import to a software
- More secure and interactive
- Uses an open source software that allows you to validate the entire device operation
- Can host multiple cryptocurrencies
Why Trade Crypto CFDs With AvaTrade?
- Uncompromised Safety – With six regulatory authorities and segregated accounts, your money is protected at all times.
- Many Cryptos to Choose From – Trade on the wide variety of cryptos available on our trading platforms.
- No Hidden Fees – We offer zero commissions and no bank fees on transactions!
- Crypto Never Goes to Sleep – AvaTrade is one of the few brokers offer around-the-clock service and support in 14 languages.
- Generous Leverage – Increase your initial capital with generous leverage and get far more exposure to trade than your account balance. Up to 2:1 (for EU residents) 25:1 (for non-EU residents).
- Limit Your Risk – You can preset profit and loss levels by using stop losses or take profit limits when you trade. Determine the maximum amount you are prepared to risk when speculating on the price, or set a price at which you want to take profits. Future orders like Buy Stops and Buy Limits are also available.
- Trade Cryptos Against Fiat Currencies – Unlike many exchanges out there, who are restricting their clients to trade only Crypto to Crypto, our clients can trade Cryptos against Fiat currencies (USD, EUR, JPY etc.), as well.
Cryptocurrency Trading at Avatrade vs. Crypto Exchange
| Feature |
AvaTrade |
Exchange |
| Onboarding/registration process |
Traders can start to trade immediately |
Opening an account directly is a lengthy process |
| Speed of opening a trade position |
Immediately |
Each trade is confirmed via an arbitration panel and takes up to 30 seconds |
| Regulation |
AvaTrade is Regulated on 5 continents and continuously monitored |
Cryptocurrency exchange are not subject to regulatory authorities |
| Earning potential |
Potentially profit even when markets are moving downward |
Earn only when the traded asset is on an upward trend |
| Security |
No risk of hacking or cryptocurrency wallet theft |
High risk of hacking and cryptocurrency wallet theft |
| Trade execution |
Immediate |
Clearing house required |
| Liquidity |
Extremely liquid |
Liquid |
| Commissions |
None |
Mandatory |
Open a Trading Account at AvaTrade and start trading cryptocurrencies with a regulated broker today!
Today’s Most Popular Cryptocurrencies:
Here are Today’s Most Popular Cryptocurrencies:
This mega-powerful currency has not only opened the gate for other currencies, but also leads the cryptocurrency world with pride. It is governed to make sure no extra Bitcoin is produced, as a maximum quantity of 21 Million Bitcoin units was agreed to. When introduced, the rate was $1 to 1,309 BTC. The wheel has turned, and when Bitcoin reached the all-time high of $19,783.21 in 2017, it was certainly a meaningful milestone for Satoshi Nakamoto, the creator of Bitcoin.
Bitcoin Cash (BCH) was created by the Bitcoin hard fork on August 1, 2017, resulting in a new version of the blockchain with different rules. By switching from the main Bitcoin blockchain to a new version, the software now has a capacity for a larger number of transactions.
Bitcoin Gold (BTG) is the second fork from Bitcoin (i.e. the second version to stem from Bitcoin’s source code). It retains Bitcoin’s transaction history, meaning that if you owned Bitcoin before the fork, you now own the equal amount of Bitcoin Gold. This cryptocurrency aims to introduce an alternative mining algorithm that is less susceptible to ASIC-based optimization, therefore allowing users to earn more with their computer cycles.
Alt-Coins
Altcoins is the general term associated with the cryptocurrencies launched after Bitcoin’s success. At first, these were mere copies mimicking the original Bitcoin. Today, there are over 1,000 of these, and the list just keeps growing. Most crypto coins are launched following an ICO (Initial Coin Offering – a form of crowdfunding) in which the developers raise cash by offering a limited number of initial coins to finance technological development. So far, besides the list below, we can find names, such as Namecoin, Peercoin, Bytecoin, Deutsche eMark, Novacoin, Cryptogenic Bullion, Quark, DarkCoin and Mangocoinz (for smartphones).
Ethereum (ETH) is more than just a currency – it’s like one giant computer housing many computers around the globe. Ethereum can respond to sophisticated requests. Its ability to store revolutionary computer programs, known as smart contracts, gives Ethereum an edge over Bitcoin and has attracted attention from banks around the world. This, among other factors, has led to a jump of almost 10,000% in 2017!
Litecoin (LTC) is similar to Bitcoin in many of its characteristics and is also one of the more veteran cryptocurrencies out there. However, there are two main differences between Litecoin and Bitcoin: Speed and amount. While it takes 10 minutes to create a Bitcoin block, Litecoin demands roughly 2.5 minutes to create a block – meaning 4 times the speed. Moreover, Litecoin attracts many users, as it can produce 4 times the quantity of Bitcoin! However, as Litecoin uses highly complex cryptography, often mining it is more complicated than other cryptocurrencies.
Ripple (XRP) can be described as the next generation of payment networks. Originally set up to engage financial industry leaders, the digital currency has been a leading technology so far. This cryptocurrency exploded in 2017, going from $0.0063 to over $1.
The e-coin that is considered Ethereum’s biggest competitor. The EOS blockchain gained its fame because of the way it effectively records and secures transactions. It is similar to the Ethereum blockchain but faster, more scalable, and allows users to build decentralized applications more efficiently. Market analysts are promoting the currency as ‘The Most Powerful Infrastructure for Decentralized Applications’ and expect the coin to be dumped and pumped, which could provide some interesting short-term opportunities.
What are Stablecoins?
Stablecoins are the newest class of cryptocurrency. Because cryptocurrencies are so volatile market participants needed a way to hold their capital in digital form without suffering from that volatility. Thus the stablecoins were born. These special types of cryptocurrencies offer price stability, liquidity, and are backed by a reserve asset in many cases to ensure value.
Most of the stablecoins have their value pegged to the U.S. dollar and attempt to maintain a value of $1 at all times. There are currently three types of stablecoins; those backed by fiat currency, those backed by another cryptocurrency, and algorithmic stablecoins that have nothing backing them but instead use a working mechanism to maintain a stable price. The most popular stable coin is Tether (USDT), but there are many others such as the USD Coin (USDC), TrueUSD (TUSD), Dai (DAI), Paxos Standard (PAX), and others
What Makes Cryptos Ideal for Trading
Cryptocurrencies allow traders to diversify their investment portfolio, as their price is mainly determined by demand and supply; Their value has a low correlation to national economies or political scenarios. Once Bitcoin surpassed the price of gold in 2017, US markets introduced 2 ETFs on Bitcoin and drew more and more institutional money into the world of cryptocurrencies. In 2017, Indian PM Narendra Modi has announced the gradual replacement of paper currency with electronic currency; In March 2018, the Marshall Islands announced that they would be introducing a cryptocurrency to replace US dollars as their main currency; other central banks are investigating the adoption of blockchain-like technologies… in short cryptocurrencies are probably here to stay. A growing number of crypto investors all over the world have already discovered the benefits:
- Cryptocurrency trading allows traders to diversify their investment portfolio, as cryptocurrency price is mainly determined by market sentiment, demand and supply
- Benefit from a wide range of today’s top traded cryptocurrencies
- e-coins offer a new form of high-volatility investment
- Cryptos are traded 24/7, even during the weekend
Trading Cryptocurrency CFDs
AvaTrade offers its clients the opportunity to trade CFDs on the largest and most popular cryptocurrencies such as Bitcoin, Ethereum, and Litecoin. This allows the clients to speculate on the price movements of these cryptocurrencies without exchanging any actual digital assets.
Because there are no cryptocurrencies being exchanged there’s no need to worry about wallets, private keys, or addresses. Perhaps even better is there’s no need to worry about hackers stealing your coins. CFD traders can fully focus on taking advantage of the price movements of the underlying cryptocurrencies without any of the worries that come with ownership of crypto assets.
Open a Trading Account at AvaTrade
and start trading cryptocurrencies with a regulated broker today!
