Everyone’s talking about the security of crypto wallets right now but are there any other ways to trade? The Blackwell Global crypto team discuss whether you can ditch your wallet and still trade cryptos.
The total cryptocurrency market cap has crossed the $300 billion mark, with more than $15 billion worth of coins being traded daily. Retail and institutional investors are continuously tracking prices of Bitcoin, Ethereum, Ripple and other coins for different reasons. While some turn towards cryptos as a hedge against inflationary pressures on fiat currencies, others trade these coins in a bid to diversify their traditional financial portfolios. And, then there are some who look for opportune moments to invest in cryptocurrencies just for FOMO (fear of missing out). After all, no other asset class in history has offered such potentially whopping returns.
Fear has always been an important driver of the financial markets; but this emotion has played a particularly crucial role in the crypto space. Hundreds of thousands of speculators, traders and investors across the globe steer clear of cryptocurrencies, missing out on opportunities that could potentially make a real difference. Broadly speaking, these fears stem from two sources – vulnerability to hackers and volatility in the market. Here’s a look at both these aspects of crypto investing.
The excitement around Bitcoin prices surging close to $20,000 in December 2017 was accompanied by news of $64 million being stolen by hackers. When an asset class becomes that valuable, one can safely assume that it will attract the most experienced hackers.
What’s most important to understand is that cryptocurrency transactions are safer than the online transactions we regularly perform. Crypto transactions are safer than wire transfers of fiat money, online payments using credit or debit cards and internet banking.
So, it isn’t the crypto transactions that are vulnerable to hacking. Rather, it is the crypto wallets. A cryptocurrency wallet is essentially a software programme that can interact with various blockchain platforms to send and receive digital currency and maintain a record of the remaining balance. The wallet is operated using private and public keys.
What makes crypto wallets the most vulnerable is that most of them are operated by people who are not totally tech savvy. Millions of investors use these wallets without completely understanding how they work and, far worse, with many misconceptions.
The level of security of a crypto wallet depends to some extent on the type of wallet being used and how carefully one has chosen the wallet provider. The different types of wallets include online, desktop, mobile and hardware wallets. Investors with online wallets are the most vulnerable to attacks, since these are maintained on a web server that can be accessed by anyone. In comparison, a desktop wallet is offline and less vulnerable to malicious attacks.
The security of a crypto wallet is, largely depends on how well the user can protect it. You need to back up the wallet and keep only a tiny fraction of coins online. Regularly updating the software also helps. You can install more layers of security by choosing highly complex passwords.
Rather than investing time to identify the right wallet and learning how to secure it, you could trade crypto CFDs (Contracts for Difference). Using crypto CFDs, traders get the power to speculate on price movements of Bitcoin, Ether and other alt coins without having to purchase the digital currencies.
Crypto CFDs are very simple to trade. If you already have a CFD account, it’s possible to access digital coins through it. With CFDs, traders can speculate on opening and closing prices without owning the underlying crypto.
Anyone who has heard of cryptocurrencies is familiar with how volatile the market can be. Large price swings have caused nightmares for crypto owners. People with crypto wallets do not find many attractive opportunities to sell when the trend is largely downward.
Crypto CFDs are a much more flexible and accessible instrument than buying coins, storing them in wallets and waiting for an opportune moment to sell them. Market volatility, which can give asset owners sleepless nights, is a friend of CFD traders. High price fluctuations offer several attractive opportunities to buy and sell these trading instruments. In fact, the popularity of CFDs has grown since they are considered effective volatility trading tools, mainly because of their simplicity and wide reach.
With crypto CFDs, you can trade both rising and falling markets. This instrument allows crypto traders to go short when the price trend of a coin is downward.
While crypto wallets have no protection against volatility, CFD traders can use risk management techniques, such as stop losses or profit limits. With crypto CFDs, traders can set the maximum amount they are prepared to lose and the price at which they wish to take profits. This relieves you from having to continuously monitor the crypto market.
Another factor that adds to the flexibility is that CFDs can be traded in different lot sizes, depending on your trading style and risk appetite. If you’re new to cryptos, you can begin with trading smaller lot sizes, until you gain confidence and develop a trading strategy that works for you.
When you trade crypto CFDs, it’s possible to use leverage. This means you can trade with a higher amount than what is present in one’s account. With this, traders can enhance the return potential on their capital outlay. However, leverage also increases the exposure to risk. So, the decision regarding the extent of leverage to be used needs to be taken with great caution.
Although the crypto market has become mainstream, there are liquidity issues. Low liquidity presents a great challenge for crypto wallet owners, who find it difficult to sell coins easily and fast during such periods. Crypto CFDs, on the other hand, allow you to open and close positions almost immediately.
For crypto CFD trading, ensure that you’ve chosen a licensed broker offering excellent customer support and advanced tools.
Explore your crypto/CFD possibilities now at Blackwell Global, an established and regulated broker offering 15+ cryptos to trade on its platform.
What’s the latest on cryptos?
The total cryptocurrency market cap has crossed the $300 billion mark, with more than $15 billion worth of coins being traded daily. Retail and institutional investors are continuously tracking prices of Bitcoin, Ethereum, Ripple and other coins for different reasons. While some turn towards cryptos as a hedge against inflationary pressures on fiat currencies, others trade these coins in a bid to diversify their traditional financial portfolios. And, then there are some who look for opportune moments to invest in cryptocurrencies just for FOMO (fear of missing out). After all, no other asset class in history has offered such potentially whopping returns.
Fear has always been an important driver of the financial markets; but this emotion has played a particularly crucial role in the crypto space. Hundreds of thousands of speculators, traders and investors across the globe steer clear of cryptocurrencies, missing out on opportunities that could potentially make a real difference. Broadly speaking, these fears stem from two sources – vulnerability to hackers and volatility in the market. Here’s a look at both these aspects of crypto investing.
Hackers Turn Up Like Bad Pennies
The excitement around Bitcoin prices surging close to $20,000 in December 2017 was accompanied by news of $64 million being stolen by hackers. When an asset class becomes that valuable, one can safely assume that it will attract the most experienced hackers.
What’s most important to understand is that cryptocurrency transactions are safer than the online transactions we regularly perform. Crypto transactions are safer than wire transfers of fiat money, online payments using credit or debit cards and internet banking.
So, it isn’t the crypto transactions that are vulnerable to hacking. Rather, it is the crypto wallets. A cryptocurrency wallet is essentially a software programme that can interact with various blockchain platforms to send and receive digital currency and maintain a record of the remaining balance. The wallet is operated using private and public keys.
Crypto Wallets and Vulnerabilities
What makes crypto wallets the most vulnerable is that most of them are operated by people who are not totally tech savvy. Millions of investors use these wallets without completely understanding how they work and, far worse, with many misconceptions.
The level of security of a crypto wallet depends to some extent on the type of wallet being used and how carefully one has chosen the wallet provider. The different types of wallets include online, desktop, mobile and hardware wallets. Investors with online wallets are the most vulnerable to attacks, since these are maintained on a web server that can be accessed by anyone. In comparison, a desktop wallet is offline and less vulnerable to malicious attacks.
The security of a crypto wallet is, largely depends on how well the user can protect it. You need to back up the wallet and keep only a tiny fraction of coins online. Regularly updating the software also helps. You can install more layers of security by choosing highly complex passwords.
Trading Cryptos Without Wallet Vulnerabilities
Rather than investing time to identify the right wallet and learning how to secure it, you could trade crypto CFDs (Contracts for Difference). Using crypto CFDs, traders get the power to speculate on price movements of Bitcoin, Ether and other alt coins without having to purchase the digital currencies.
Crypto CFDs are very simple to trade. If you already have a CFD account, it’s possible to access digital coins through it. With CFDs, traders can speculate on opening and closing prices without owning the underlying crypto.
Crypto Wallets and Volatility
Anyone who has heard of cryptocurrencies is familiar with how volatile the market can be. Large price swings have caused nightmares for crypto owners. People with crypto wallets do not find many attractive opportunities to sell when the trend is largely downward.
Trade Cryptos With Greater Flexibility
Crypto CFDs are a much more flexible and accessible instrument than buying coins, storing them in wallets and waiting for an opportune moment to sell them. Market volatility, which can give asset owners sleepless nights, is a friend of CFD traders. High price fluctuations offer several attractive opportunities to buy and sell these trading instruments. In fact, the popularity of CFDs has grown since they are considered effective volatility trading tools, mainly because of their simplicity and wide reach.
With crypto CFDs, you can trade both rising and falling markets. This instrument allows crypto traders to go short when the price trend of a coin is downward.
While crypto wallets have no protection against volatility, CFD traders can use risk management techniques, such as stop losses or profit limits. With crypto CFDs, traders can set the maximum amount they are prepared to lose and the price at which they wish to take profits. This relieves you from having to continuously monitor the crypto market.
Another factor that adds to the flexibility is that CFDs can be traded in different lot sizes, depending on your trading style and risk appetite. If you’re new to cryptos, you can begin with trading smaller lot sizes, until you gain confidence and develop a trading strategy that works for you.
When you trade crypto CFDs, it’s possible to use leverage. This means you can trade with a higher amount than what is present in one’s account. With this, traders can enhance the return potential on their capital outlay. However, leverage also increases the exposure to risk. So, the decision regarding the extent of leverage to be used needs to be taken with great caution.
Although the crypto market has become mainstream, there are liquidity issues. Low liquidity presents a great challenge for crypto wallet owners, who find it difficult to sell coins easily and fast during such periods. Crypto CFDs, on the other hand, allow you to open and close positions almost immediately.
For crypto CFD trading, ensure that you’ve chosen a licensed broker offering excellent customer support and advanced tools.
Explore your crypto/CFD possibilities now at Blackwell Global, an established and regulated broker offering 15+ cryptos to trade on its platform.