Bitcoin Trading – Certificates or Real Bitcoin?

The analog world is increasingly subject to digitization – in everyday life as well as in the economy. Fiat money is moving into the background for future-oriented users in favor of cryptocurrencies. Litecoin, Bitcoin and Co. are renewing the central bank system and represent a decentralized alternative to existing financial structures. Thanks to digital encryption technology, the oldest of the digital currencies makes it possible to offer cross-border payment transactions on favorable terms. The cryptocurrency trade gains popularity. It raises questions for inexperienced investors.

For example, many traders believe that leveraged trading with the virtual currency works only with contracts for difference. Several investment forms allow trading with Bitcoin with a lever. Investment certificates are one example. The Swiss private bank Vontobel was the first provider to bring these investment products to the stock exchange. Since 2016, interested traders have been investing in a classic tracker certificate. Similar to CFD trading, they benefit from the price development of the Internet currency. At the start of the sale, the Bitcoin price hovered around 700 euros.

Since then the virtual currency has established itself as a “bankable asset” that does not require a crypto stock exchange or wallet for trading. In order to trade a Bitcoin certificate with leverage, you should consider this type of investment before investing. The structured products have an average term of two years. First-time buyers benefited from a yield of 800 percent in 2018. Traders who decided to buy the certificates after 2016 faced a problem. Prices fell in the course of 2018, leaving a small profit at maturity. This maturity restriction is a weakness of tracker certificates.

Bitcoin Trading with Leverage

Experienced investors are interested in tactical trading with fast entry and exit. With this procedure the high volatility of the cryptocurrencies is considered as advantageous. On the other hand the purchase and long-term holding of a Bitcoin certificate leads to a substantial risk of loss.

Open-end certificates represent an alternative to tracker certificates. The offers of several financial service providers include other assets in addition to Bitcoin, for example

  • Litecoin
  • Ripple
  • Ethereum
  • Bitcoin Cash

This platform teaches a lot of helpful stuff regarding leveraged crypto trading.

Trading Bitcoin Certificates with Leverage – you should keep this in Mind

Compared to other financial instruments, Bitcoin certificates represent an uncomplicated investment opportunity. Predominantly in case of a probable rise in the price of the coins it is worthwhile to invest in certificates. These are not in circulation without restrictions, so that few financial service providers offer them to their customers. The financial product represents a performance of the price and offers a one-to-one participation.

This applies to exchange rate gains and losses of Bitcoin against the US dollar. Although the limited term can have disadvantages, the certificates are meeting with popularity. A securities account is a prerequisite for investing in this form of investment. You open this with a broker, branch or direct bank. A securities account comparison on the Internet will help you to find an offer that is both inexpensive and of high quality.

Buying real Bitcoin – where and how does it work?

In addition to investing in CFDs and certificates, traders in Bitcoin exchanges trade in the crypto currency. In doing so they convert, for example, euros into the virtual currency. Trading on a crypto exchange is more anonymous than with a classic broker. To open an account, investors provide their personal data. They then act under a nickname or a participant number.

Accordingly, the trading partner does not learn any details about buyers or sellers. With a Bitcoin exchange, trading is automated. The users specify how many coins they buy or sell at which price. The program then searches for a suitable offer and closes the trade on behalf of the customer. Alternatively, the investors decide to search for offers manually in a crypto-marketplace. Both purchase options involve greater effort than trading with contracts for difference. For example, traders need a virtual wallet to store their Bitcoin assets.

The wallet exists in different forms. A smartphone wallet is recommended for flexible trading on the move. Transactions from a PC can be realized with an online wallet. A further alternative is the hardware wallet. It does not have a connection to the Internet, so it does not provide a target for hackers. In this digital wallet you store and manage the various Bitcoin addresses. In addition, the program allows you to receive and send the cryptocurrency. It stores the transactions, so you benefit from a convenient overview.

The transfer of Bitcoin is not much different from a classic bank transfer. You do not need an IBAN or account number of the recipient during the process. All you need to know is the recipient’s Bitcoin address. The agreed amount is transferred to the seller’s account without any intermediary. For this reason there are lower fees compared to bank transactions.

Install a wallet, set a passphrase, a strong password. This “private key” allows access to your online wallet. You give it before all transactions. Make sure that the key does not fall into the hands of unauthorized persons.

Various Possibilities and special Features for Trading Cryptocurrencies

For beginners it is difficult to deal with the direct purchase of the Bitcoin as well as their safekeeping in the Wallet. Partially they feel uncertain when trading at a crypto stock exchange. Numerous exchanges are subject to inadequate regulation, so that low security standards prevail. For this reason, regular stock exchange trading arouses the interest of risk-conscious investors. Several financial products allow an investment in Bitcoin without buying them. In addition to contracts for differences and derivatives, ETNs are proving to be an investment opportunity.

Exchange Traded Notes are debt securities. They are not limited to Bitcoin. The world’s first ETO on a crypto index comes from a financial services provider in Switzerland. The ETPs – Exchange Traded Products – is the term ETN used by the majority of providers. The collateralized debt securities differ from regular certificates due to the collateralization. The main difference to an ETF traded on the exchange is the underlying investment form. ETFs are funds that combine several indices.