Cryptocurrency, like other asset types such as stocks and commodities, may be traded in an organized marketplace. Trading is the buying and selling of cryptocurrencies and other assets. Lets begin from the cryptocurrency and the essentials and go deeper.
WHAT IS CRYPTOCURRENCY?
Cryptocurrency, a by-product of blockchain technology, is a type of digital currency that resides solely on the internet. It is this ground-breaking technological advancement that has finally realized the internet’s potential to enable direct peer-to-peer cash exchange. Cryptocurrency is really novel in that, unlike any other known type of currency now in circulation. It is not regulated by any centralized body. Similarly, to how the Reserve Bank of India (RBI) oversees the supply of Indian Rupees (INR), cryptocurrency is regulated by a decentralised network of nodes. This provides transparency to this currency.
THE ESSENTIALS OF CRYPTOCURRENCY TRADING
Cryptocurrency, like other asset types such as stocks and commodities, may trade in an organized marketplace. This trading takes place on trading platforms such as Bitcoiva, India’s largest exchange. Currencies can be bought and sold in exchange for fiat money such as INR or other coins and tokens. The basic premise of cryptocurrency trading is the same as it is for stocks: purchase when the price is low and sell when the price is high.
A crucial distinction is the idea of asset-to-asset trading, which stock market traders would be unaware of because all trading occurs against fiat money. In the case of crypto assets, one coin may be exchanged for another without the need of any kind of currency. Consider the Bitcoin (BTC)/Litecoin (LTC) trading pair, which means you can purchase Litecoin with Bitcoin or sell Litecoin for Bitcoin. Of course, it is possible to acquire coins with cash. But in general, most altcoins purchase using BTC or Ethereum (ETH). These are the two coins that dominate the fiat-to-crypto trade in India.
TRADING IN THE BTC MARKET WITH INR?
In India, there are several Digital Currency Exchanges (DCE), each of which operates as a separate market. Which has its own set of prices for the coins available for trading. The prices of cryptocurrencies posted on exchanges are their BTC values, that is, prices relative to Bitcoin. It is worth noting that all currencies other than Bitcoin are referred to as altcoins (alternate coins). The pricing differential on each platform can attribute to a difference in user demand and supply. To determine the worth of their coins in foreign currencies, users can utilise a price conversion tool such as Bitcoiva. As an example, the image below from Bitcoiva depicts the conversion of Bitcoin into INR.
To be able to deal effectively in bitcoin, it is necessary to comprehend the notion of trading pairs. Consider the BTC/LTC scenario from before, and say you have cash and BTC in your wallet and wish to obtain LTC. Of course, one obvious approach would be to buy Litecoin directly using INR. Assume that the value of BTC in INR rises by 10% but the value of LTC remains same. In this scenario, if you purchase LTC with BTC, you get 10% more than if you buy it with INR. As a result of employing trading pairs rather than a single rupee trade, your purchasing power increased. You may keep various currencies in your portfolio by trading one for the other without ever needing cash.
On exchanges, cash-to-crypto transactions are also available. In actuality, a new user’s initial transaction would be to purchase bitcoin using conventional money from the associated bank account. It is also possible to sell out by receiving INR in one’s connected account as a result of the sale of crypto assets.
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