Crypto Trading vs Crypto Network: What You Need To Know

Cryptocurrencies are digital assets which can be traded in a crypto market. This trade sometimes involves pairing two coins against each other. One can decide not to trade cryptocurrency and instead store digital coins as a store of value.

Crypto trading, however, is the act of predicting the price of cryptocurrency without necessarily taking ownership of the traded coin. This can be done by going 'long' (buy) if you feel the value of the coin will rise or going 'short' (sell) if you feel the value will fall. Many cryptocurrency trading platforms sometimes give out signals on how an asset might perform in the crypto market so as to enable the trader to make the right call.

This is also a leveraged product signifying that you must deposit a small amount known as a margin in order to be fully exposed to the market. Your profits or loss is calculated based on the leveraged margin used and so the profit or loss would be magnified.

How to Trade Cryptocurrency

For you to trade cryptocurrency, basic steps need to be followed. The steps include,

Some traders have also tried out automatic trading using some software. These trading bots enforce a process that has already been designed to give you significant returns while trading.

The cryptocurrency market is characterized by buyers and sellers. There are two opposing sides to a trade. This means that there must be a winner and there must be a loser. This, therefore, requires the investor or trader to carry out research and have a detailed understanding of how the crypto market works. This will help him optimize his profits and minimize his losses.

How Cryptocurrency Market Works

The cryptocurrency market is a decentralized market. This means that there are no restrictions or control by the government or any authority. Digital assets are traded using a method known as over-the-counter. The crypto market is operated through networks or computers.

Unlike physical currencies, cryptocurrencies are digitally owned and can be stored on blockchain networks. When a transaction occurs between two users, it can only be completed once it has been verified and has been added to the blockchain network.

A blockchain is a system where transactions carried out in that particular system is recorded and maintained across several computer networks. This can also be seen as a transaction history that identifies ownership which might change over time.

What Are Crypto Networks?

Crypto networks are also digital assets. They make use of blockchain technology. This technology is a distributed ledger that links a decentralized network where users freely transact and develop applications without restrictions from an authority or government. The blockchain is an incorruptible database system that chronologically records and timestamps transactions carried out at a given time.

The blockchain supports the peer to peer transactions. This means that transactions can be carried out by different users without the interference of an intermediary and these transactions are carried out in a safe and secured condition. This is the reason why the blockchain system needs multiple participants so that it can singlehandedly verify the output algorithms produced in the 'block'.

One of the best use of blockchain technology is to act as a support to cryptocurrency transactions. It is a database that facilitates swift, secured and unique transactions of crypto networks.

Bitcoin became the first cryptocurrency network to break out. Individual programmers under the supervision of Nakatomi Satoshi introduced the crypto network Bitcoin and it became very popular in 2009. Since then, Bitcoin has dominated the cryptocurrency market.

Apart from Bitcoin, there are several other crypto networks. Some of these networks are;

• Ethereum: Ethereum is a decentralized network with a smart contract functionality. It became the second largest crypto network after Bitcoin. It was developed by programmer Vitalik Buterin in 2013 and has since evolved into Defi networks. The Defi applications also have provisions for financial transactions without the need for an intermediary.

Ethereum allows users to create their unique NFT and also exchange them in the network. These NFTs symbolize ownership of a particular asset which can be in form of an artwork or sound and is fully recognized and accepted by many institutions. On September 15, 2022, Ethereum evolved from a proof of work (PoF) mechanism to a Proof of Stake (PoS) mechanism.

• Litecoin: Litecoin is also a decentralized peer-to-peer cryptocurrency network. It was one of the first altcoins that were started in October 2011. It has lower transaction fees and faster transaction verifications.
• Ripple (XRP): Ripple was created in 2012 and is a remittance network created by Ripple Lab Inc. Ripple was built on a distributed open-source protocol that provides tokens that represent the fiat currencies or the cryptocurrency.

Some other Crypto networks include Cardano (ADA), Tether (USDT), Binance coin (BNB), Solana (SOL), Binance cash (BUSD) etc.