Different Ways To Trade Cryptocurrency

Slowly but surely, cryptocurrency is becoming more mainstream. Once seen as a sort of niche asset for tech enthusiasts, it is now a full-fledged commodity class growing more legitimate by the day. In just the last year or so, a growing number of prominent cryptocurrencies, general expansion of understanding regarding cryptos, and bitcoin’s performance during the pandemic have all contributed to some positive momentum.

This doesn’t mean that all of the questions about cryptocurrency have been answered. But it does mean that more people are likely to look into crypto investment themselves. We looked recently at some risk-free ways of getting bitcoin, and these are important to take into account if you’re among those beginning to consider investment. You’ll want to get familiar with terms and processes like cloud-mining, faucets, and even sales for bitcoin. Beyond simply obtaining cryptocurrency though, you’ll also want to understand some of the different investment methods available to you.

To that end, we’re offering a look at a few of the different ways to invest in cryptos.

Investing Apps

Most newcomers to crypto investment will likely be drawn to the investing apps first. These are essentially digital exchanges (some of which double as software “wallets”) that turn crypto investment into a straightforward process. Through these apps (such as Coinbase, Robinhood, and others), you are able to purchase prominent cryptocurrencies with either fiat currency or, in some cases, other cryptocurrency. You can then attempt to profit off of what you’ve purchased, either via regular trading or long-term investment. The app acts more or less as a broker, typically with small fees involved in conducting trades.

CFD Trading

The acronym “CFD” refers to contracts for difference, which are alternative asset trades that focus less on the acquisition of an asset and more on speculation regarding said asset. Trading cryptocurrency CFDs specifically means organizing contracts (through CFD brokers) about where you think a given crypto asset may be headed. While there’s a little bit more to it, the fundamentals are simple: If you correctly predict that a cryptocurrency’s value will go up or down, you can profit off of your contract. Throughout this process, you never need to actually own or store cryptocurrency.

Blockchain ETFs

“ETF” stands for exchange traded fund. And like CFD trading, it’s a concept that is known beyond the realm of cryptocurrency. If you’re not familiar though, the idea is basically the same as stock trading. Technically, an ETF is a “fund” that bundles multiple assets together such that they can be traded as a single entity. Right now, there are actually some cryptocurrency ETFs beginning to emerge; they’re not particularly accessible just yet, but they introduce the possibility of trading bundles of crypto assets like stock funds. In the meantime though, some exchanges do offer ETFs revolving around blockchain assets — offering a sort of roundabout alternative method of indirect crypto investment.

Hardware Wallet Stashing

For more long-term cryptocurrency investment, you can also turn to the practice of stashing assets on what are known as hardware wallets. A hardware cryptocurrency wallet is basically an offline storage system that protects your private keys — which are essentially your access codes to any cryptocurrency you might have stored on a blockchain. In practice, investing via hardware wallet stashing is no different than keeping assets in an app or software wallet. For long-term holdings though, hardware wallets are thought to be more secure. Basically, you can stash cryptos on a hardware wallet for as long as you’d like, connecting to your assets only if and when you decide to use or sell them.

There are pros and cons to each of these methods, and each of them requires careful strategic thinking if it’s to be successful. But if you’re gaining interest in crypto trading, these are some of the most established ways to go about it.