Top Crypto Brokers 2018
Best Platforms to buy & Sell Bitcoin and Ethereum
We’ve tested and reviewed the best Bitcoin & Ethereum trading platforms. We’ve done the reviews based on the following criteria:
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Cryptocurrencies: What is Bitcoin ?
Cryptocurrencies or cryptos, also referred to as digital currencies have their own monetary value. They are produced through electricity as well as mathematical and high-performance computations. Bitcoin is also a cryptocurrency that is widely traded by investors from all walks of life. It is one of the most popular virtual cryptocurrencies that have attracted traders from all parts of the globe. Read on to find out what is BTC or Bitcoin and also discover how they work.
As the world’s first ever crypto currency, BTC Bitcoin was designed by Satoshi Nakamoto, a developer by profession. The cryptocoin appeared in 2009 and the other digital cryptocurrencies that have since been established are referred to as alternate coins or Altcoins. BTC uses the rules and regulations of cryptography for generating units of the cryptocurrency.
The currency is stored on an individual’s local hardware and this process is referred to as cold storage. This helps in protecting the digital currency from others and hence it does not get stolen by anyone. On the other hand, when a trader loses this hardware, which consists of bitcoins, they’re lost forever.
Investors use bitcoins for several purposes including booking hotel accommodations on Expedia, shopping for their favorite furniture and purchasing online games. However, they’re primarily used for trading as many individuals around the world have grown rich after investing in them. In 2017 the bitcoin price skyrocketed to reach in thousands. This is also one of the major reasons why traders are showing keen interest in the cryptocurrency.
How it Works?
Bitcoins are essentially virtual currency or coins that do not require banks for moving or storing them. The moment you buy bitcoin, it acts like gold coins in physical form that possess monetary value. In fact after you buy bitcoin, you can use it for trading as well as purchasing goods as well as services on the internet. Alternatively, you can keep them with you and wait for its value to increase with the passage of time. Hence, the digital currency is traded from one wallet to another.
The wallets are basically small personalized databases that traders store on their computer hard drives or cold storage. Additionally, they can also be stored on smartphones and tablets. In fact, traders can also opt for cloud storage when it comes to storing their bitcoins. Thus, they’re designed to resist forgery and counterfeiters cannot manipulate any system for creating these cryptocurrencies.
Bitcoin Regulations and Values
Bitcoins vary in terms of value on a daily basis. Traders can keep a track of the value of one bitcoin through places such as Coindesk and determine its current value as and when required. Traders must also note that at present over 2 billion dollars of the cryptocurrency exist in the market. In fact, Bitcoin will no longer be created once the cryptocurrency touches twenty one billion coins mark. This is likely to happen somewhere near 2040.
As a currency, bitcoin isn’t regulated or centralized. There isn’t any national banking institution or authority for bitcoins. In fact, there isn’t any insurance coverage for the depositors either. The cryptocurrency is self-contained and hence there isn’t any costly metal that supports bitcoins. Bitcoin is managed by miners, a vast chain of individuals who use their PCs for managing the massive network. These miners also function as auditors or ledger keeping agents for all bitcoin related transactions. Hence, these miners get money for all the accounting work carried out by them. They continue to make their contributions towards the network as and when they earn fresh bitcoins every week.
How to Acquire Bitcoins?
In order to purchase bitcoins, investors can use any of the below mentioned methods:
Purchase on a Bitcoin Exchange: There are several marketplaces that are referred to as bitcoin exchanges that allow individual investors to purchase or even sell their bitcoins using multiple currencies. One of the most common and leading bitcoin exchanges is the Coinbase exchange. Apart from this, one can also purchase bitcoins via the Bitfinex and Biststamp exchanges. However, the Bitfinex exchange isn’t that reliable as around ten million worth of bitcoins went missing from the Bitfinex after a hacking incident in the year 2016.
Transfer Bitcoins: Apart from buying through the exchange, individuals can also exchange bitcoins with another investor using the mobile applications or even computers. This is like sending money digitally.
Individuals also compete with each other for mining the bitcoins with the help of computers. This is exactly how the bitcoin digital currencies are generated. Currently, the winner is given around 12.5 bitcoins at an interval of ten minutes.
Anonymity in Bitcoins
Even though every bitcoin related transaction is entered in a log that is accessible by the public, the names of the sellers as well as the buyers are not revealed. Only the wallet identification numbers of the investors are displayed. Hence, this helps in keeping a bitcoin trader’s transactions hidden and private and also enables them in buying or selling anything that they wish to without worrying around being traced back. This is precisely why more and more people are now using the currency to purchase drugs or engage in wrongful activities.
Bitcoins hold a simple to comprehend data file known as blockchain. Each and every blockchain is different for every individual as well as his/her personal wallet. All the bitcoin related transcations are entered within a public file that can be accessed by anyone. This not only prevents fraud but also ensures bitcoins authenticity. This further helps in preventing transaction duplication and does not allow anyone to copy bitcoins either.
This process helps in preventing transactions from being duplicated as well as people from copying bitcoins. As a result, the public cannot view a user’s identity easily but they can certainly view your bitcoin wallet’s history. This implies that people cannot use the bitcoins for illegal or dubious purpose.
Is there any fee for Using Bitcoins?
When it comes to using the bitcoins, people need to pay a very minor fee. Also, there isn’t any ongoing bank fee for using bitcoins and other cryptocurrencies as there is no bank involved. Users of bitcoin will be paying small amount of fee to 3 different bitcoin groups of services including the servers that support the miners network, online bitcoin exchanges that are responsible for converting the bitocin into dollars as well as the mining pools that they join.
While, the server node owners shall charge fee (a couple of cents) just once for completing the transaction each time a user sends money via their server nodes, the exchanges shall charge fee when the user chooses to cash his/her bitcoins for euros or dollars. In addition to this, most of the mining pools shall either apply a minor 1% support fee or demand a small donation amount from those who join the pools. Investors must realize that the costs related to using Bitcoin is nominal and the transaction fee as well as mining pool donation amounts are highly cheap when compared to the conventional wire transfer or bank fees.
BTC Production Information
Anyone in the public with a strong personal computer can mint Bitcoins. They’re made via a system known as cryptocurrency mining. Those who mine these currency coins are known as miners. Bitcoin is often referred to as a self-limiting currency as only twenty one million bitcoins shall exist in the future. As far as bitcoin mining is concerned, an individual will have to work throughout the day to solve complex mathematical problems. Every problem consists of a 64 digit solution set. Thus, only when your personal computer is functioning without stopping even once, it could solve one problem in a matter of 2-3 days or even longer.
Users who choose to mine bitcoins can earn around 50-75 cents of US dollar every day after deducting the electricity expenses. Miners who run thirty six powerful personal computers together on a large scale can earn as much as 500 US Dollar every day after the deduction of costs. In fact, Small scale miners using a single computer will end up spending more in terms of electricity cost than they will ever earn through the mining of bitcoins. Hence, mining of bitcoins is profitable only if one is running multiple personal computers and also joins a miners group for combining the power of their hardware.
Security of Bitcoin
Bitcoins are highly secure and holding them is similar to owing a bag full of gold currency or coins. People who take adequate precautions can keep their cache well protected and safe from being accessed by hacker. The bitcoins wallet is easy to store online or even offline, which makes it safe from being hacked. However, other than worrying around being hacked, users of bitcoins need to back up their wallet using a .dat file copy. This file is regularly updated after a user sends or receives bitcoins and must be appropriately copied as well as stored in the form of a backup on a daily basis.
The BTC currency can be misused in three different ways including:
Technical Fault: Bitcoin currency travels from peer to peer and it takes a couple of seconds to confirm the transaction across different computers. During such time, a user who is dishonest and employs quick clicking could submit a 2nd round of payment using those very bitcoins to another recipient. Even though the bitcoin system shall eventually identify that there has been a double spending on the part of the user and also negate the 2nd transaction, in case the 2nd recipient exchanges goods with the buyer even before the receipt of a confirmation, then the 2nd recipient shall end up losing the payments as well as the purchased goods.
Dishonest Pool Organizers: Bitcoin pool organizing members can take unfair slices of share. Remember, mining of bitcoin is best done when a group of miners come together. The pool organizers thus get the much desired opportunity to choose the manner in which all the bitcoins shall be divided. These organizers can choose to behave dishonestly and take a large share of bitcoin shares and keep it with them.
Mismanagement on Part of Humans: People who run unregulated exchanges online who accept cash in exchange of bitcoins could become incompetent or dishonest.
Why Should You Choose/Trade Bitcoins?
Even though there is a great deal of discussion and controversy around bitcoin trading, the number of bitcoin brokers are increasing with every passing day. In fact, bitcoin brokers across the globe encourage investors to choose bitcoin over other currency pairs owing to some of the reasons mentioned below:
- Bitcoins aren’t produced by the government or central bank. It isn’t regulated either. Hence, government based taxation agencies, police and even banks cannot keep an eye on your money.
- There is no middleman or bank involved when it comes to transferring bitcoins. Bitcoins are transferred via P2P network established between different individuals.
- Banks as well as law enforcing agencies can neither audit nor freeze the bitcoins wallet. In fact, only the one who owns the wallet can decide the manner in which their money would be used or managed.
- Bitcoin is changing the manner in which we spend and store our money/wealth.
Bitcoins allow individuals to enjoy complete control over their wealth. While the paper currencies and virtual balances that lie in the bank promise to contain value, Bitcoins posses their own value. After the emergence of printed money, the entire world relies on bank and central government to control and monitor the currency. These banking institutions not only engage in printing of our virtual currency but also store and move the same. In fact, they also levy charges on us for offering their services. It is important to note here that paper currency promises to hold value but does not have any gold in its actual or physical form to support that promise.
However, while bitcoin traders are always worried about keeping a track of the bitcoin price, they fail to understand that any transaction involving bitcoin is irreversible. Apart from this, they must also know that once they lose their bitcoin wallet’s password or even the data on the hard drive, it is lost forever.
I've been a professional trader for over 5 years.
Currently I work as forex analyst for different investment companies.
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