The Pros and Cons of Trading Bitcoin

By  //  October 19, 2020

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Bitcoin is in high demand today due to the many benefits it offers the world, starting from it being a decentralized currency and also how profitable it’s been for most people.

Over the years, bitcoin continues to grow as it rises and falls in price. There’s also an estimation from a recent report that the retail demand for bitcoin will exceed the new supply by 2028. This and other reports so far have made bitcoin look promising for the future.

However, like every other form of investment or trade, bitcoin trading has its pros and cons.

Pros

1. Freedom to Pay

Bitcoin makes transactions easier than ever, as there are no third parties involved. You can send bitcoin to other people within and outside your country within seconds. Bitcoin is a digital currency that transcends certain limitations that you might experience with traditional banks. You are in control of your money and can choose when you want to pay and who or where you wish to pay.

2. Low Trading Fees

Bitcoin transactions have relatively low fees compared to traditional banks and it takes a few seconds to minutes to complete a transaction regardless of where you’re sending from or to. This is one of the major reasons why most people would rather opt for bitcoin, especially for high-value transactions.

3. Transparency of Transactions

Bitcoin prioritizes the transparency in transactions, as they are recorded and validated through a network of computers. With this, the public can see all your final transactions. However, for your privacy, bitcoin keeps all your personal information private. This means unless someone has your login details or private key, they wouldn’t know it’s yours.

Cons

1. Risk and Volatility

Bitcoin is volatile, which means it is likely to change quickly and unpredictably, thereby making it a high risk. While this may be a great advantage to many traders, as they can always buy when the price is low and sell when it’s high, it could also lead to some trading risks.

This scares most people away from bitcoin, as there’s a likelihood that they would lose a lot in the process. Bitcoin is finite and as the demands increases, the already mined bitcoin reduces, which also reduces its volatility. At some point, there’s a chance that traders won’t enjoy the profits from the rise and fall of prices that they do today.

However, you can use the Average True Range Indicator to calculate the volatility of your bitcoin and to also identify entry and exit levels.

2. Security Issues

Security is a huge factor when trading bitcoin, as there are no third parties involved, including any institution like the bank. While this lack of regulation helps with flexibility in transactions, it could also put you at a risk. If a wrong transaction occurs, you would lose your funds.

However, it is encouraged to take practical steps to ensure you don’t fall into the hands of fraudsters. This includes using a safe bitcoin app with proper security measures, keeping your private key safe, and also doing your research before sending money anywhere for juicy offers.

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