Cryptocurrency Explained Cryptocurrency at CAPEX

Cryptocurrencies are one of the most popular assets to trade in 2021 at CAPEX. So, naturally, we’ve provided an in-depth explanation of “what is cryptocurrency” and how to trade them.

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Thomas Walker
Author:
Thomas Walker
Last Updated on:
24/05/2023
Topic:
Trading
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20+ cryptocurrencies

Trade more than 20 unique cryptocurrency CFDs, such as bitcoin, Ethereum, Cardano, and Polkadot, in a 24/7 marketplace. Trading cryptocurrencies at CAPEX is so advantageous, considering you can trade against the market by shorting cryptocurrencies when you think a bear market trend is on the horizon.

Cryptocurrencies can be traded on all the CAPEX trading platforms and you can experience them all on the CAPEX demo account too. There are so many charts and indicators for crypto trading too and you can use them for each of the 20+ cryptocurrencies available to trade as CFDs at CAPEX.

Multiple trading platforms

Besides trading with demo account, traders can invest in cryptocurrencies using either the CAPEX WebTrader or MetaTrader 5 trading platform. Both accessible on Windows, iOS, and Android Devices. Experiment with both trading platforms at CAPEX to see which is best for you. Each provides unique advantages and what may suit one person may not suit another.

Both platforms facilitate fast trading and feature plenty of CAPEX trading charts and indicators to ensure your trades are backed by deep research. With CAPEX, we offer plenty of choices, to trade your way!

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What is cryptocurrency?

Whether it is making major financial market news, all over social media thanks to an Elon Musk tweet, or consistently talked about around the office, it’s pretty much impossible to go a day without cryptocurrency popping up somewhere.

So what is cryptocurrency? Cryptocurrency is a digital or virtual asset that acts as a form of decentralised currency. Originally aimed as a way to make cross-border transactions that were cheaper, faster, and more secure than traditional means, cryptocurrencies have grown into a financial revolution of sorts.

Secured through advanced cryptography on a distributed network of an immensely massive number of computers, cryptocurrency is realistically impossible to hack or counterfeit and is free from government control. These networks that leverage blockchain technology provide an irrefutable ledger of every transaction and they cannot be altered or removed in any way. Most commonly, cryptocurrencies are traded by buying and selling the asset.

Cryptocurrency at CAPEX

However, at CAPEX, we offer a more diverse and advantageous way to trade cryptocurrencies, with CFDs. Trading CFDs allows traders to take speculative positions based on the cryptocurrencies value and projected value without actually owning the underlying asset. Get ready to trade with the best online broker for cryptocurrencies.

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How valuable is cryptocurrency?

Cryptocurrencies are largely an unregulated asset and are free from government inflation; what influences their value differs somewhat from typical financial instruments like stocks, bonds, or forex.

So where does cryptocurrency derive its value? Like any instrument that can be traded on CAPEX, there are several important factors. Initially cryptocurrency gained value because enough people simply decided it was valuable and it grew from there. In fact, many small altcoins in the modern social media world drive valuation through the backing of many social media users.

Generally speaking, supply and demand is still a large factor with many crypto assets containing a finite number of coins – Bitcoin for example, is nearing its limit of minable coins. How quickly a coin is adopted by its intended user base or even financial institutions can greatly drive the value of a cryptocurrency up.

Cryptocurrencies play a large factor too – see the value of Cardano and Ethereum coins that provide an energy efficient mining method, called staking, and can be used to develop decentralized apps.

How cryptocurrency works

To fully understand cryptocurrency, it’ll help to understand the fundamentals of the technology that powers this popular digital asset. You don’t need to know the real technical stuff but a basic understanding is important to understanding what a particular cryptocurrency is offering.

The blockchain has many purposes and features, but the important component to understand is the ledger. The blockchain is an irrefutable ledger that records every transaction perfectly. It cannot be altered or removed. Through the blockchain, any asset of value can be tracked – this is particularly popular now in the world of non-fungible tokens and for developing security technologies.

Blockchain technology has made cryptocurrencies more than just a store of value or a tradeable currency. Cryptocurrency platforms such as Ethereum allow businesses to track shipping orders, transactions, and much more on its blockchain network.

CAPEX Academy

There is an utter plethora of in-depth trading information, lessons, videos, and other educational resources on offer at our trading school. The CAPEX Academy can help with cryptocurrency trading strategies and provide more info on what is cryptocurrency, should you ever feel stumped. The CAPEX Academy is the ultimate education platform for new traders to gain key trading knowledge. Be sure to also check out the featured articles that cover such an immensely wide range of financial and trading topics.

Explaining the blockchain

The easiest way to visualise the blockchain is to think of the network as a long series of interconnected blocks – like a train. Data is stored within each block and there really isn’t a limit to what can be recorded.

Of course, most commonly the block contains a record of transaction information such as when and what was traded. Since the blocks are securely linked together, no one block can ever be altered in any way, shape or form.

Each block strengthens the chain and every recording cannot be reversed. Blockchain technology is essentially tamper-proof and ensures a completely trustworthy network for its members. Thankfully, you won’t need to consider all this when trading in CFDs at CAPEX.

Cryptography explained

Cryptography is nothing new really, but its implementation in blockchain technology is revolutionary. It is the technique of sending a secure message in which the sender encrypts a message using a key or algorithm and the recipient decrypts the message using another key or algorithm. This puts the crypto in cryptocurrency and without it, there would be no crypto CFDs to trade at CAPEX.

Crypto storage in action

Cryptocurrency is stored in a crypto wallet and the owner of that wallet is given a public address and private key in order to send and receive cryptocurrency on a blockchain network. Think of the public address as the location for your cryptocurrency – i.e., your wallet – but without the unique private key, the public address is inaccessible. The best way to imagine it is that the public address is a storage locker and the private key as the only working key. If a private key is lost, or stolen a crypto trader would lose access to anything stored in that wallet.

You’ve probably heard horror stories of people losing their private keys and subsequently all their assets too. If you trade crypto through  CFDs at CAPEX, that won’t be a problem, as you don’t own the underlying asset, but get all the value.

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What is decentralized finance?

Having a solid understanding of innovations in the crypto-space is vitally important to accurately speculating on the value of any one cryptocurrency. One of the biggest innovations in recent years within the crypto-space is that of decentralized finance (DeFi) – that is the use of cryptocurrencies to fund and fuel the development of products and services that utilise blockchain networks and technology.

Spend a few moments reading cryptocurrency news and you will most certainly have heard of “Smart Contracts”. Popularised on the Ethereum network but now offered by several cryptocurrencies, smart contracts are an example of an early decentralized application – or Dapp. Smart contracts are a way for businesses and individuals to automate agreements between two or more parties on an irrefutable blockchain network – a near-perfect contract.

Decentralized finance is a concept that really shouldn’t be ignored when investing in the cryptocurrencies at CAPEX. The growth of this industry and concept has a positive influence on the value of the cryptocurrency market and many cryptocurrencies are racing to become the dominant asset in this realm.

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Ways to trade cryptocurrency

There are several ways to trade cryptocurrencies. Originally, the only way to buy cryptocurrency was via a peer-to-peer trade of funds for bitcoin – a method you can still use today. The most common method is to buy and own cryptocurrency via an online cryptocurrency exchange. Through an online exchange, an investor can buy and sell cryptocurrencies using traditional FIAT currencies or other cryptocurrencies.

However, at CAPEX, we offer another unique way to trade cryptocurrencies such as bitcoin, Ethereum, and Litecoin, that offers the unique advantage of leverage and the ability to short an asset a trader may feel is likely to lose its value. As we briefly mentioned, we offer cryptocurrency investments in the form of CFDs or Contract for Difference. A CFD is a way to trade the value of cryptocurrencies without actually owning any. Think of it as placing a wager on whether cryptocurrencies value will go down or up.

Demo trading

Practice cryptocurrency trading for free and with zero real-money risk. Traders can develop trading strategies and gain a full understanding of trading cryptocurrencies with leverage. You can experiment with crypto trading strategies, fully explore the WebTrader platform, and watch the actual markets in real-time. Apply leverage to your trades to see how it affects your position and use various orders on offer from CAPEX to understand sensible trading strategy.

Why trade cryptocurrency

There are plenty of reasons to trade cryptocurrencies, especially at Capex.com. Choosing to trade cryptocurrencies will depend entirely on the motivations, financial goals, and resources of each individual investor. However, we at CAPEX have selected some of the best reasons to trade cryptocurrency.

  • Intrinsic value: Cryptocurrencies have plenty to offer. Not just for cheap and fast cross-border transactions, cryptocurrencies have plenty of business applications through decentralized applications (dApps). There are legitimate business benefits to using cryptocurrencies and plenty of reasons to hold and use cryptocurrencies. Check out the featured articles at CAPEX for more examples of the intrinsic value of cryptocurrencies.
  • Hedge against inflation: Many cryptocurrency bears and major institutional managers argue that cryptocurrencies are an excellent hedge against inflation, much akin to that of gold in the 1970s. This is owing to its decentralized nature and because it is unable to be influenced by governments. Trading CFDs at CAPEX is a great way to achieve this.
  • CFDs require no ownership: You can trade cryptocurrencies without the hassle of actually owning the asset. That means no cryptocurrency wallets to deal with, no passwords, or keys to worry about losing. At CAPEX, you can trade CFDs of multiple cryptocurrencies.
  • Advancing technology: It wasn’t that long ago that nobody really understood cryptocurrencies and today crypto technology finds more ways to enhance our lives. This is definitely an asset worth investing in at CAPEX because it is a technology that moves incredibly fast.
  • High liquidity: Cryptocurrency benefits from very high liquidity and with that comes market stability, accurate technical analysis and incredibly fast transaction times. A high liquidity market ensures fair prices for all traders.
  • 24/7 marketplace: Unlike any other marketplace like stocks or forex, cryptocurrency can be traded 24/7. That’s right! The crypto markets never sleep. You can trade anytime you choose at CAPEX and you don’t have to wait for the opening bell each day.
  • High volatility: Some might argue this is a negative but high volatility in CFD trading can provide huge potential if you can predict the trend.

 

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Cryptocurrencies in summary

Cryptocurrencies are a highly liquid and volatile instrument with huge potential to revolutionize the global banking systems as we know it. Leveraging advanced cryptography and unique blockchain technology, cryptocurrency provides a safe, secure, and fast method for cross-border transactions and a platform for the development of advanced business applications.

The future of cryptocurrency

Very few markets will find as much widely contested debate as the cryptocurrency market. There are die-hard crypto bulls that believe in a cryptocurrency revolution of the world’s banking systems and convinced crypto bears that believe cryptocurrencies are bubbles waiting to burst. However, the future of cryptocurrency looks bright.

Cryptocurrency exchanges have become publicly listed companies, several nations are looking to adopt a stable cryptocurrency tied to their national currency, and cryptocurrencies are saving the economies of several nations. International business in regions such as Africa depend on cryptocurrencies for cross-border commerce and El Salvador is rebuilding the country’s financial infrastructure through the adoption of bitcoin as legal tender.

At CAPEX, we understand that cryptocurrencies are an important part of the future of the world’s banking systems and offer over 20 unique cryptocurrencies to trade on two featured-packed live trading platforms.

Conclusion – Trade Crypto CFDs at CAPEX

We at CAPEX provide investors from around the world a diverse and easy way to invest in cryptocurrencies without having to actually buy the underlying asset. CFD crypto trading on CAPEX platforms allow traders to buy or sell the value of a cryptocurrency using 2:1 leverage for added advantage although remember that it can be a double-edged sword.

Head to CAPEX.com today to sign up and access the cryptocurrency demo account and our online trading school to learn to trade cryptocurrencies today.

What is Cryptocurrency – FAQ

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📈 Why trade crypto CFDs?
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