Bitcoin 101: An Introduction To a New Monetary Standard

The Backstory

In this article, we’ll answer the question: What is Bitcoin? Bitcoin emerged as a consequence of the 2008 financial meltdown, created by a person or group who called himself Satoshi Nakamoto. In the original whitepaper, the stated goal was to create “a new electronic cash system” that was “completely decentralised with no server or central authority”.

The technology and concept were cultivated right up until 2011, where Nakamoto turned over the source code and domains to others in the space and subsequently vanished from the scene. What is bitcoin? In layman’s terms, bitcoin is a digital currency with no physical representation, unlike fiat. There are no bills to print or coins to mint. It is a decentralised payments network with no government, institution, bank or otherwise in control. Owners of the coin are pseudonymous, which means that a user’s identity isn’t readily available for all to see. So, Instead of names, tax IDs or social security numbers, bitcoin enables buyers and sellers to connect through encryption keys. Unlike traditional currencies, coins are not issued from a top-down structure, but rather are “mined” by thousands of computer participants in the network connected through the internet.

What is bitcoin mining?

In order to mine new bitcoin, a series of computers must solve a series of math and cryptographic problems, which mint coins, record transactions on the bitcoin ledger, and secure the network. When someone sends bitcoin to another user, the network records the transaction, and all of the others made over a certain period of time in what is called a “block”. Miners (i.e. computers running specific software) inscribe these transactions on a massive ledger, where all transactions are visible since the inception of the currency. Collectively, these blocks are what make up the “blockchain” – an eternal, openly accessible record of all transactions.

With their specialised software and hardware – and no small amount of electricity – miners convert these blocks into sequences of code, called a “hash”. Producing a hash carries more weight than it sounds, as producing a hash requires serious computational power, wherein thousands of miners compete simultaneously to do it. In layman’s terms, it’s as if a thousand chefs are feverishly racing to prepare an extremely complicated dish, and the first one to serve the perfect version ends up getting paid.

The newly created hash is placed at the end of the public blockchain. Miners are rewarded for their work, earning as much as 12.5 bitcoin’s, which back in February 2018 was worth around $100,000. From a more technical perspective, bitcoin’s monetary policy dictates that every 210,000 blocks (or approximately every 4 years), this miner reward is slashed in half in an event called the halving. Find out more about the halving here.

What determines the value of a bitcoin?

At the end of the day, bitcoin’s value is determined by the free market and whatever people will pay for it. This is similar to how foreign exchange fiat currencies are meant to be priced, but with a completely public, decentralised and unalterable monetary policy.

The protocol ensures that only 21 million bitcoins will ever be minted, with over 18 million having been mined thus far. In effect, the limited supply is similar to gold and other precious metals with a tweaked intrinsic value-proposition that’s based on unstoppable and immediate transactions, among other things.

Given the relatively early stages bitcoin has existed in relation to gold, bitcoin is still undergoing volatile process of price discovery, which speculators, traders and investors are well-aware of – at least for the most part. The coin has minted plenty of millionaires among the tech pioneers and early bitcoiners, the Winklevoss twins being two of the most well-known bitcoin billionaires in the crypto playground.

How do I purchase bitcoin?

If you’re willing to assume that buying and selling bitcoin and other cryptocurrencies carries risk, there are many regular and margin exchanges available to enter the marketplace. Regular exchanges are typically used for new beginners and allow simple purchasing of cryptocurrencies. For those who are more advanced traders familiar with margin trading like those from FX and other traditional markets, there’s also the possibility to trade on margin using bitcoin as collateral. The latter is riskier and should only be used by highly experienced traders and investors. That said, there are plenty of tutorials which show users the ropes on how to trade bitcoin.

What can I do with bitcoin?

Believe it or not, bitcoin can be used to buy things from over 100,000 merchants worldwide. A recent survey showed that over 36% of American businesses accept crypto payments, indicating a growing retail demand for bitcoin and other virtual currencies.

Is this legal?

Bitcoin is accepted legal tender. In fact, bitcoin has just recently been given the go-ahead by major financial organisations and watchdogs to be used as a legal financial instrument, among other things. A series of regulatory developments in early 2020 are now also serving to boost on-ramps into the space as bitcoin and other cryptocurrencies surge in popularity in South Korea, India, Europe and throughout America.

Are there other cryptocurrencies?

There are over a thousand cryptocurrencies, each with their own claimed use-case and world-changing solution. Of course, it’s vital to note that these assets exist in a highly entrepreneurial space which has only existed for a little over 10 years. Serious observers and market participants operate with the knowledge that any number of these projects can and will probably go to zero. Needless to say, bitcoin and a handful of other early cryptocurrency projects have stood the test of time and are unlikely to fail given their resilience.

The future is decentralised

That being said, recent events surrounding the corona virus epidemic continue to emphasize the importance and need for a currency that exists outside what might be called an interchangeable system of fiat currencies. As government printers work on overdrive to the sound of trillions of dollars in stimulus, the need for an alternative currency system has never been greater.

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Bitcoin Trading – How To Trade Bitcoin

While the Bitcoin market is relatively small in comparison to Forex, interest in cryptocurrency trading continues to grow exponentially. Having been around for decades, the matured Forex market is now worth trillions of dollars as people trade huge amounts of cash on big exchanges.

But why do people trade currencies, commodities and stocks? While there are different reasons to invest or park money in these various assets, traders see these tradeable assets as a means to profit off their volatility. Indeed, volatility is every trader’s dream.

Given that traders chase volatile markets, then it stands to reason that bitcoin is the perfect asset to trade, as evidenced by the numerous exchanges offering financial products for traders. Put simply, Bitcoin is one of the most volatile assets in the world, hence it is popular among successful traders.

That said, let’s take a look at how to trade bitcoin’s volatile market.

A Guide On How To Trade Bitcoin – Key Steps

  1. Buy Bitcoin From A Bitcoin Exchange
  2. Create An Account On A Bitcoin Trading Platform
  3. Deposit The Bitcoin To The Platform
  4. Learn Basic Trading Strategies
  5. Start Trading Bitcoin!

This page will help you through your journey with some essential and important tips on how to get started with Bitcoin trading, HOW to trade Bitcoin and WHY someone would want to trade Bitcoin in the firs place. In addition, this article will give you some background information explaining bitcoin in more depth, because it is important for a trader to know what asset s/he is trading.

Why trade Bitcoin?

Bitcoin trading is surging in popularity as exchanges such as Bybit and Phemex are registering thousands of new users every day to their Bitcoin trading platforms. The questions is: why are traders choosing Bitcoin trading over traditional trading?

Forex Trading Vs. Bitcoin Trading

One of the major reasons for this shift is due to the volatility present in the Bitcoin market. Since a trader can make money both when the price goes up or down, then this market presents a great opportunity for traders who wish to either long or short prices.

In light of this, many Forex traders and commodity traders have now started to trade Bitcoin instead. To put things in perspective, Bitcoin’s price can spike up 10% one day, and come back down 7% the next on an average trading day. For the average investor that might present a problem, but for a Bitcoin trader, this volatility is eminently desirable. The implied volatility in Bitcoin almost guarantees that the prices will be different from day to day.

The Market Is Open 24/7

Something quite unique about Bitcoin trading is that you can trade Bitcoin all day and all night, because the market is NEVER closes. If you trade on an exchange like Bybit, you can trade WHENEVER you want, 24/7, unlike legacy markets. Clearly, that is a feature that many traders are drawn to.

No KYC

Another big factor behind the growth of Bitcoin trading is the fact that most Bitcoin exchanges don’t require KYC (Know Your Costumer) information. This makes the ease of access as simple as an email sign up. You can then deposit Bitcoin, and start trading instantly.

If you already own Bitcoin, you can go to Bybit for example, and sign up with your email, and start trading Bitcoin within 30 seconds. However, if you don’t already have Bitcoin, check out our list of the best Bitcoin exchanges to buy Bitcoin from.

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BitMEX Tutorial – Complete Guide To Leverage Trading On BitMEX

If you want to learn exactly how to trade Bitcoin on BitMEX, you’ve come to the PERFECT place. This BitMEX tutorial will be a simple step-by-step guide for you.

Not only will you learn the basics, but you’ll also learn extremely valuable tools for making your Bitcoin trading more profitable.

Successful Bitcoin traders around the world are using the BitMEX exchange. Actually, BitMEX is the biggest cryptocurrency leverage trading exchange in the world & in this tutorial we will show you step-by-step how to trade on BitMEX like a successful cryptocurrency trader.

In this BitMEX tutorial you will learn:

  • How to trade Bitcoin on BitMEX
  • The basics of leverage trading
  • How to short Bitcoin & altcoins
  • What a liquidation price is
  • How to set a stop loss
  • How BitMEX fees work

Intro To BitMEX Exchange

The mechanics of Bitcoin trading might seem complicated at a first glance. However, in this tutorial we will make it extremely simple. This BitMEX tutorial will be suitable even for complete beginners. Also, there is a guide on this website called How To Trade Bitcoin, for people who are new to trading.

One of the most common questions people ask is: Can I lose more Bitcoin than the Bitcoin I deposit into BitMEX? No, the only funds you can lose is the funds you deposited. You will never become indebted to BitMEX.

If you made a 0.05 BTC deposit on BitMEX, the maximum amount you can ever lose is that 0.05 BTC. In order for you to be able to do leverage trading, BitMEX has something called the “liquidation price”. More about this below, so keep reading!

Register An Account

It’s really simple to register an account, and all you need is an email address. No KYC is needed to trade cryptocurrencies on BitMEX.

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Bybit Tutorial – Complete Guide To Leverage Trading On Bybit

In this Bybit tutorial, you will learn EXACTLY how to trade Bitcoin on Bybit and how to optimize your Bitcoin trading to be more profitable. Let’s dig in!

When searching for a Bitcoin trading exchange to trade Bitcoin on, it is important that you use an exchange with many users, high liquidity and great user experience. This is where Bybit exchange comes in, as it is at the forefront of the exchange technology and has taken the industry by storm.

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A Step-By-Step Bybit Exchange Tutorial

Bybit is one of the most popular Bitcoin futures trading platform to trade cryptocurrencies on. Trading Bitcoin and altcoins on Bybit is super easy compared to its competitors, and in this Bybit tutorial, we’ll go through the experience step-by-step. To start off with, you’ll need to create a Bybit account.

Bybit Vs. BitMEX

Bybit exchange has become one of the more prominent exchanges in terms of liquidity, and more Bitcoin traders are moving over to Bybit from BitMEX. Aside from a plethora of other reasons for Bybit’s superiority over Bitmex, there are two main two reasons traders choose the former. That is, Bybit does not get “system overload”, unlike Bitmex. The trading experience is seamless and Bybit can handle more trades per second than BitMEX. Another reason is that Bybit has outstanding customer service. You can check out our full BitMEX review here.

Make sure to read this whole tutorial for our best tips and tricks to maximize your profits when trading Bitcoin with leverage on Bybit.

Trade On Bybit From The US

If you are trading from the US, you’ll need to use a VPN. Trading from the US is currently blocked from Bybit. We recommend NordVPN, the most popular VPN out there. There are free VPN’s, but they are usually not very good. Please know that using a VPN is entirely at your own risk and in no way are we responsible if your funds are seized.

In this Bybit tutorial you will learn:

  • How to trade Bitcoin on Bybit
  • The basics of leverage trading
  • How to long and short Bitcoin with leverage
  • How to trade XRP, Ethereum & EOS
  • What a liquidation price is
  • How to set up a stop loss

Leverage Trading For Beginners

A common question is: can I lose more than I deposit into the exchange and then be in debt to Bybit? No, you can never lose more than you deposit into Bybit account. If you deposit 0.1 BTC into Bybit exchange, the maximum amount of funds you can lose is 0.1 BTC. Moreover, you can never lose more than the funds you use to open a position.

To understand this, you’ll need to know the basics trading on Bybit, which you’ll learn in these rapid fire info-graphics. If you want to know how to trade Bitcoin, you need to understand margin trading, also known as leveraged trading.

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A simple Explanation Of Leverage Trading & The Risk Involved

On Bybit exchange, you can trade Bitcoin with up to a 100x leverage. An easy way of understanding leverage trading is to think of it as being able to open a position worth more money than the initial margin you are risking to open the position. When leveraged trading, it’s important to know that margin trading offers both big opportunities as well as risks.

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