In order for you to decide whether Bitcoin trading is a valid way of generating an income, you need to ask yourself what amount of trading risk you are willing to take in order to make a profit with this currency. According to a senior financial advisor at Wilkins Finance, each individual financial market trading specialist has a certain level of risk he or she is willing to take where trading is concerned. Having said that, it is a wide known fact that trading with Bitcoin poses a high risk as its price is volatile to a great extent.
With the below questions you should ask yourself, you’d be able to answer the question – should you consider Bitcoin trading as an income generation activity?
Is Bitcoin a unique digital currency to trade with?
To date, there are over 7000 different types of cryptocurrencies scattered around cyberspace. However, only about 200 of these currency types are traded with and only 10 of the mentioned currencies are widely used. Bitcoin, however, forms one of the 10 currencies that are widely used, thus it can be seen as a trustworthy currency, despite the fact that its price is plummeting.
Can you buy a part of a Bitcoin?
If you do not have the capital to purchase a whole Bitcoin, you can purchase a part of it. When trading with these Bitcoin parts, strategies can become quite difficult to hold onto. This, however, makes it much easier for financial market traders who don’t have access to huge amounts of capital as a whole Bitcoin is quite expensive.
Are the exchange fees lower than when trading on the traditional markets?
Bitcoin exchange fees can be anything from 0.1% – 4% per transaction. When you take this into consideration, it is evident that these fees are much lower than that of traditional exchange fees. Some Bitcoin exchanges such as Coinbase offers a 0% exchange fee, making it a fantastic investment when wanting to give your trading profit margin a bigger boost.
What security issues are there when wanting to trade with Bitcoin?
As the currency is digital, thus used in cyberspace, it is easy for hackers to get access to your Bitcoin capital. With encryption keys used when exchanging Bitcoin, you are now able to store your Bitcoin offline. To put it in another perspective, it is pretty much like storing money in a bank vault. Remember that hackers get access to the wallet where Bitcoin is stored in so that is where you need to focus your security measures on. Should you choose to trade with Bitcoin, you can also get access to an investor’s key that provides you with further protection.
Should new traders proceed with caution when wanting to trade with Bitcoin?
As previously stated, trading with Bitcoin poses a huge number of risk but can make your profit margins much higher than traditional methods. If you are a new trader that wants to start trading with Bitcoin, it is suggested that you open a demo account with a brokerage that allows Bitcoin trading first before investing actual capital. That way, you can determine if you’d be able to handle the trading risk and if in fact, Bitcoin trading should be considered as a form of income.
Although there are many sceptics in the virtual currency trading world, some are of the opinion that even though the Bitcoin price has fallen dramatically, it will soon rise again, as with all other forms of traditional currency. With every downtrend of this currency, an uptrend should be around the next corner.
When taking the above-mentioned questions into consideration, it is safe to say that if you are willing to take the risk, Bitcoin can be considered as a valid way of generating an income as every trader should not look at what the currency price will do in a few weeks, they should look at what the currency will do over the long haul. Having said that, traders should not trade with only a few weeks in mind, they should trade with their entire future in mind where they can create huge profits.