With bitcoins becoming popular in the world of trading, more and more traders and investors are entering the world of cryptocurrencies through bitcoin trading. But before you get deep into cryptocurrency or bitcoin trading, you must know the advantages and disadvantages associated with bitcoin trading. It is good to pursue your own research before getting into any trade. So if you want to indulge in bitcoin trading here are some advantages and disadvantages that you must know.
Advantages of bitcoin trading
1. Freedom and flexibility of payment
Let us take an example. Say if you are in France, and you need to send money to your friend who is in Australia, you can easily do it through bitcoins. Since bitcoin is a currency that exists and operates virtually, you can easily facilitate trade, send and receive money through the technology of bitcoins. You don't even have to worry about the bank holidays. Since there is no central authority that regulates bitcoins or other cryptocurrencies, you are the sole controller of your money and currency.
When we target money to anyone, the factor that runs in our minds is the transparency of information and transfer. This is one of the most significant advantages of trading bitcoins. The blockchain technology keeps track of all transactions of bitcoins, and all the data is available to the public. But at the same time, no one can look into any of your data and information. Anyone can track the address of your digital wallet, but none of the personal details can be revealed. No one can manipulate transactions with bitcoin trading be it the government, big organisations, or any individual whatsoever.
3. Lesser risks to vendors
Since transactions cannot be taken back or reversed, do not imbibe any personal information, and are safeguarded, merchants and traders have fewer risks. Sellers have more protection against the losses and frauds. The blockchain technology acts as a saviour and even lets sellers do their business in the riskiest of markets with utter security.
4. Low fees
No one wants to incur high fees on their transaction. The low fees on the trade is another fair advantage associated with bitcoin trading. Most of the time, the fees depend on the particular exchanges or transactions. There are no fees or very minimal fees associated while facilitating payments through bitcoins. When the higher fees are involved, transactions lend to run quicker and are listed as priorities in the bitcoin trading network.
Disadvantages of bitcoin trading
1. High volatility and risks
The high volatility and risks are the major issues tied up with bitcoin trading. Some argue that volatility can be a disadvantage as well as an advantage of bitcoin trade. This whole ambiguity of how volatility might work in the market can render high risks in trading. The volatility originates from the fact that there are only 21 million bitcoins and 80 percent of them have already been mined. Therefore, demand is on the rise too.
2. Underdeveloped cryptocurrency
Another reason many traders and investors refrain from trading bitcoin is that it is still in its developing stage. There are a lot of features and processes that are yet to be developed fully. One of such features will be making bitcoin more secure and accessible among traders. Bitcoin will take some more time to work on its difficulties and challenges like any other currency does during its developing stage.
Since the use and popularity of bitcoin are growing day by day, the governmental organisations want to keep a tab on how the bitcoin is traded. But since bitcoin trading is entirely decentralised and anonymous, it invites the illegal trade of goods and services.
Moreover, the legalities associated with bitcoin trading differ from country to country. Many countries have banned the trade of bitcoin.
Due to the chaos of regulation, it leads to a lot of risks and confusion.
4. Short-lived price charts
Bitcoin is relatively a new venture and was released in 2009. Therefore, the data about the available price is very short as compared to traditional currencies. Therefore, it becomes quite challenging to facilitate technical analysis and depict the movement of bitcoin.
Bitcoin trading, like any other trade, has its own advantages and disadvantages. One needs to find a way to take the maximum of the benefits offered and minimise the risks. If you are eyeing for an online broker to facilitate Bitcoin trading or other trades, we would recommend HFTrading. HFTrading is a regulated broker functioning in New Zealand and Australia. The broker provides trade in a wide range of securities like forex, stocks, indices, commodities, metals, and cryptocurrencies.