An Introduction To Bitcoin As A Tradable Asset

27 Jun An Introduction To Bitcoin As A Tradable Asset

Title: An Introduction To Bitcoin As A Tradable Asset

While it was once considered by some to be a disruptive technology with the potential to take the place of conventional currency, Bitcoin has increasingly been seen in the last year or two as more of a commodity. In fact, a major U.S. regulator (the Commodity Futures Trading Commission) even went so far as to officially classify Bitcoin as a commodity, like gold, silver, oil, or even wheat. In effect, Bitcoin is classified as an asset or a means of storing wealth, rather than as a functional currency (though it can still function as the latter).

This might not mean much to you if you aren't particularly involved with Bitcoin, but it does introduce the idea that Bitcoin can be traded, rather than used in everyday life. And that ought to interest anyone who likes to stay on top of financial opportunities and maintain a diverse investment portfolio. But how should Bitcoin be handled as a tradable asset?

The most important thing is learning how to buy and store Bitcoin, as you can't necessarily trade cryptocurrency the way you would any other commodity or asset. There are a handful of ways to obtain Bitcoin. You can mine it if you really want to get into the math behind the technology, but most opt to purchase it with cash. And they do so either from another individual, a Bitcoin exchange, or a Bitcoin ATM. Once you obtain a given amount of Bitcoin, you can store it online, on your computer, or on your smartphone via various wallet options. There's a little bit of a learning curve, but essentially what happens is you trust a given wallet to store your own private key and Bitcoin address, where your wealth is stored. You can then use that information to sell or transfer Bitcoin when you deem it appropriate.

Through your wallet, you can really go about trading Bitcoin in a pretty independent manner. That is to say you can hang onto what you have for a given time and then look to sell it off when you decide it's time, and you can do it all on your own. However, if you're interested in being a more active investor—perhaps taking a day trading approach to Bitcoin—you'll want to find a reliable exchange that can handle quick, frequent sales and purchases. There are actually some out there that are built specifically for Bitcoin day trading, which only figures to become a more active practice as people get used to the idea of the leading cryptocurrency as a commodity.

Once you're set up with a Bitcoin wallet and you've determined what type of trading you want to engage in (and found a suitable exchange if necessary), then this becomes much like any other form of investment. You simply have to learn how to read the charts and predict the market to the best of your ability. As some experienced Bitcoin traders will say, there are some basic and distinct chart patterns used in ordinary stock trading that can be applied to Bitcoin as well. Learning these is not a bad place to start. However, you'll also need to keep an eye on cryptocurrency news and trends regarding acceptance of Bitcoin, or the currency's spread to new areas with potential to increase demand. There are a lot of factors present that aren't typical of other types of investment.

There's plenty more to it, but this should help to cover some of the basics of Bitcoin as a tradable asset. Like any commodity, it has its complex factors, but at the end of the day the actual trading might feel familiar to you.