Over the past few years, no currency has been given more attention than cryptocurrency. One may argue that this “digital money” still garners more and more attention today.
It all began with the public emergence of Bitcoin in 2009, which had been developing since the first digital currency called “ecash” in 1983. This open-source software runs on the blockchain format, a digital block of records gathered securely. Since that day, more and more of these currencies have emerged with an endless amount of possibilities.
Bitcoin, along with Ethereum and Ripple, has developed not only as a digital storage for money, but they have become the subjects for another stock market. This “stock market” is digital, just like the original, but they are only limited to the cryptocurrencies that exist now. Nevertheless, there are a few things to know about “crypto-trading” before considering the Swyftx fees New Zealand has in store.
What is Cryptocurrency Trading?
In essence, cryptocurrency trading involves a market consisting of the digital currencies traders know. However, there seems to be a problem for other people as this is a decentralized system. Therefore, instead of a market intertwined with current society, these are free from any economic factors that usually affect the stock market.
One could now consider crypto-trading a “young practice” as many unknowns are associated with it. However, despite the lack of controllers and administrators, they do run on the activities of the constituents.
How Does This Work?
As stated before, cryptocurrency trading works similarly to how stock markets work. This type of trading involves predicting and speculating the values of a particular cryptocurrency’s movement, whether the value is high or low. These are done through the “Contract for Difference” or CFD accounts like stock markets, or others may opt to buy and sell coins through simple exchanges.
Either way, you will want to buy a cryptocurrency stock at the lowest possible value while potentially selling them for higher ones.
What Are These “Hidden” Fees?
Again, much like the original stock market, some fees are involved in trading Bitcoin and other cryptocurrencies. These fees also come in differences in buying and selling prices, and these are as important as any trading fee.
This is what intimidates potential traders as well. Some companies choose not to reveal these percentages, which could be tricky for others. In any case, there are two fundamental aspects of stock markets you need to understand.
In simplest terms, the spread is a value that describes the difference between the buying and selling price. This is an essential part of the process if one intends on working with crypto for the long term.
Some would consider a lower value best for a few reasons with these spreads. For one, a 4.0% spread may lead you to pay a greater fee with a significantly lowered amount of profit. However, a company with a 1.7% average would optimize liquidity for the clients. Another essential part of these percentages is the transparency of these values, meaning whether or not the business makes these values known.
In this case, the lower the spreads are, the better it is for the clients.
Trading fees for these trades in the crypto market work as a payment for the “effort”. The idea is that one must first pay for a transaction before pulling through with the action.
These values will not reveal themselves most of the time, and the companies will not labour to make constant reminders for clients. This is also important, considering you could be facing a three-figure fine that could potentially affect your digital wallet. That is why one must make an effort to be aware of the costs and keep oneself updated for any changes.
With potential dangers from a volatile market waiting, it may be best to apply for an account with a transparent and serviceable business. This business should provide you will all the information regarding all digital currencies available. At the same time, they must also provide one with the updated list of fees one must pay for all purchases or trades.
This is especially important considering cryptocurrency is still a “young market” for traders as young as the market to make themselves familiar.