Learned by 42 usersPublished on 2024.04.01 Last updated on 2024.10.15
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Introduction to Cryptocurrency Trading
Cryptocurrency trading is very similar to other types of trading (such as contracts for difference, stocks, or currency pair trading). The main difference is that it uses cryptocurrency as the trading instrument. The essence of cryptocurrency trading is to buy digital currency and then sell it at a higher price.
The concept and development of cryptocurrency involves several key individuals and events. Here are a few important milestones and figures:
Satoshi Nakamoto: On October 31, 2008, Satoshi Nakamoto published "Bitcoin: A Peer-to-Peer Electronic Cash System," proposing the concept of Bitcoin for the first time, and mined the first block of Bitcoin (known as the “genesis block”) in early 2009.
David Chaum: In the 1990s, David Chaum launched a digital currency called “eCash” through his company DigiCash. Although DigiCash declared bankruptcy in 1998 due to funding issues, it had a positive impact on the evolution of cryptocurrencies.
Nick Szabo: In 1998, Nick Szabo proposed the idea of Bit Gold, seeking to create a decentralized digital currency.
Changpeng Zhao (CZ): Changpeng Zhao founded the cryptocurrency exchange Binance and raised $15 million through an initial coin offering in July 2017, quickly becoming the largest cryptocurrency exchange in the world.
Therefore, while no single figure “founded cryptocurrency trade,” individuals such as Satoshi Nakamoto, David Chaum, Nick Szabo, and Changpeng Zhao have played significant roles in the development of cryptocurrencies.
Here are some venture capital firms and funds investing in the cryptocurrency and blockchain space:
These firms and funds have made significant investments in the cryptocurrency and blockchain sectors, propelling the growth of the industry.
How Cryptocurrency Trading Operates:
Decentralization: The cryptocurrency market is decentralized and not controlled by governments or central authorities. It operates across computer networks, using blockchain technology for transactions and storage.
Trading Methods:
Contracts for Difference Trading: Trading through contracts for difference (CFDs) allows users to speculate on price movements without owning the cryptocurrencies. This trading requires a small deposit (margin), but profits or losses are calculated based on the full position value.
Direct Buying and Selling: Directly buying and selling cryptocurrencies through exchanges requires creating an exchange account, depositing the corresponding asset value, and storing cryptocurrencies in digital wallets.
Blockchain Technology:
Transaction Records: Transaction records of cryptocurrencies are stored on the blockchain, a distributed public ledger. Each block contains multiple transactions seamlessly linked together using complex mathematics and computer science (cryptography).
Mining: The creation of new cryptocurrencies occurs through the mining process, where computer power solves complex mathematical problems to verify transactions and add them to the blockchain.
Characteristics of Cryptocurrency:
Scarcity: The production of most cryptocurrencies is slow and limited in supply, giving them characteristics of scarcity similar to precious metals like gold.
Security: Blockchain technology has unique security features, making it difficult to alter data or perform hacking attacks through network consensus and cryptography.
Exchanges and Wallets:
Exchanges: Cryptocurrencies can be bought, sold, and stored through exchanges. When choosing an exchange, factors such as the variety of cryptocurrencies offered, fees, security features, and storage options must be considered.
Digital Wallets: Cryptocurrencies are stored in digital wallets, which require keys for transactions and management.
In summary, cryptocurrency trading operates through decentralized blockchain technology, allowing users to trade cryptocurrencies via contract for difference trading or direct buying and selling, utilizing the security and transparency of blockchain for transactions.