Cryptocurrencies

What is Cryptocurrency Trading?

Cryptocurrencies carry inherent value, and this has made them legitimate financial assets that can be bought and sold for profit. Based on this, cryptocurrency trading is the buying and selling of various coins or tokens with the aim of generating a profit. Investors can trade various cryptocurrencies via a crypto exchange or a CFD brokerage firm, such as Bluesky Brokerage.

When you trade via an exchange, you will need to create an exchange account as well as open a crypto wallet where you will be storing your coins.

With an exchange, you own actual coins in digital form and must store them securely. You will generate a profit when the value of the underlying coin you are holding increases and you sell the coins at a higher price than that which you had initially bought for. If you sell at a price lower than the buying price, you incur losses.

In contrast, with a CFD brokerage firm, you do not own the underlying coin or token – you simply speculate on its price changes.

If you place a buy order, you generate profits if you exit the trade position at a higher price. You incur losses when trading crypto CFDs if your price prediction is wrong.

CFDs offer a lucrative way of trading the volatile cryptocurrency market, and investors can also benefit from leveraged trading.

At Bluesky Brokerage, we offer you the chance to trade a selection of leading cryptocurrencies. This means you can speculate on whether you believe the price will rise or fall. When you trade with us, you can take advantage of some of the industry’s leading crypto conditions, including low spreads.

What Cryptocurrency Miners do

Cryptocurrencies are handled like cash but are mined like gold. The work of a crypto-miner is simply to ‘mine’ or ‘mint’ new cryptocurrencies.

They do this by confirming transactions on the blockchain or the public ledger. This means that mining is simply the process of verifying crypto transactions.

People around the world transfer cryptocurrencies from wallet to wallet, with miners using computer-processing power to confirm and add the transactions on the public ledger.

Once a transaction has been completed and recorded on the blockchain, it cannot be reversed. For this work, miners receive new coins as their compensation- and this is how new cryptocurrencies are generated.

Similar to physical gold, most cryptocurrencies, such as Bitcoin, have a supply limit. In the case of Bitcoin, the last coin will be mined in 2140.

By capping supply, demand will be the primary determinant of the price. Bitcoin was the first-ever cryptocurrency in the world, and it continues to be the most popular and influential cryptocurrency as of January 2021.

Nevertheless, numerous blockchain projects have created many cryptocurrencies that have grown both in terms of adoption and circulation. Some of the notable cryptocurrencies that have emerged over the years include Ethereum, Ripple, Litecoin NEO, EOS, Stellar Lumens and a number of derived currencies, including Bitcoin Cash and Bitcoin Gold.

What is a Blockchain

Blockchain is an open digital distributed ledger that publicly holds records in a manner that is secure, transparent, and decentralised. It is essentially a public database that is not controlled by one single entity. A blockchain is made up of several ‘blocks’, which are lists of transaction records that are linked to each other and they are encrypted.

Each block 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.

Every one of the numerous cryptocurrencies existing today has its own blockchain, and the complex maths 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 a cryptocurrency wallet).

What is Tangle

Blockchain emerged as a revolutionary technology whose application went beyond cryptocurrencies. But as its adoption spread, its inherent limitations were exposed.

It was a verification system that could not do without miners (and their fees), and it became heavier and slower as more ‘blocks’ and ‘chains’ were added. There was, therefore, the need for another verification technology that would solve these problems. Enter Tangle!

Like blockchain, Tangle is a data verification system. But while blockchain is a public ledger system that utilises ‘blocks’, Tangle applies the directed acyclic graph (DAG) protocol.

When you make a transaction on the Tangle platform, you have to verify the past two transactions, hence the graph is ‘directed’. It is ‘acyclic’ because past transactions cannot be used to verify present or future transactions.

Because users themselves verify transactions, there’s no need for miners or the miners’ fee. Users get to enjoy fee-free transactions as well as faster transaction speeds, and they can make as many tiny transactions as required.

Another issue solved by Tangle is scalability. Unlike blockchain that gets heavier and bulkier when a new block is added, Tangle gets more computing power as new devices or users join the platform.

This is why Tangle is the best protocol for the Internet of Things, a reference to a universe of interconnected devices that communicate with each other independently so as to carry out their unique functions. IOTA (Internet of Things Application) was the first cryptocurrency to implement Tangle, and this has led to the coin being dubbed the ‘cryptocurrency of the future’.