The phenomenon of cryptocurrencies is physically intangible and therefore sometimes difficult to understand. Learn more about what cryptocurrencies are and how trading with these digital currencies works.
What are cryptocurrencies?
To understand crypto trading, it is important to know what cryptocurrencies are in the first place. To put it short: they are digital means of payment. The data of users and their movements are encrypted (cryptography). Unlike physical money, digital tokens represent a code consisting of numbers and letters.
The idea behind cryptocurrencies is to disrupt the current financial markets. The goal is to build a decentralised financial system and provide virtual money that functions completely independently without banks or states. Blockchain technology is used for this purpose. Another important note: Blockchain and cryptocurrencies are not to be considered the same, as Blockchain is the technology - the means to an end - while cryptocurrency is an application of the Blockchain technology.
The blockchain is a decentralised system of many computers whose task is to check all transactions for correctness. For this reason, a blockchain or the information stored in the blockchain is 100% secure.
Cryptocurrencies are often regarded as being the same as Bitcoin. This is not correct. Bitcoin is one of many currencies - however the best known and currently the largest. There are now over 8'700 different tokens (as of Feb 2023). The approximate market capitalisation of the 10 largest currencies alone is € 933'991'510'790 (source: https://coinmarketcap.com/de/).
Here are the largest cryptocurrencies as of March 20th 2023:
Bitcoin
Ethereum
Tether
BNB
USD Coin
Ripple
Cardano
Polygon
Dogecoin
Solana
In expert circles, one also speaks of tokens or altcoins (alternative coins), since many coins do not have an actual payment function and in this sense are not a real currency.
So how do you trade them?
Note: Trading cryptocurrencies is risky. The crypto markets are very volatile and therefore subject to large price fluctuations. The same principle applies just like on the classic stock market: only invest in what corresponds to your willingness and ability to take risks.
Digital assets are traded on crypto exchanges. Well-known exchanges include Nexo, Binance, Coinbase and eToro. To be able to trade on these exchanges, you need certain prior knowledge and a good technical understanding. Furthermore, there are trading platforms, such as Cointract, which are connected to the exchange, but enable a simplified process via app, without requiring any technical crypto-know-how on the users part.
To trade on the exchanges, an extensive registration process is required. This is to ensure that customers must be known (Know Your Customer) in order to prevent money laundering and terrorist financing. You also need a wallet. The wallet is a software that allows you to send and receive coins.
Once you have created an account (whether on a trading platform or an exchange), you first have to deposit FIAT currency (conventional currency such as CHF, USD, EUR) and convert it into a cryptocurrency such as USDT, BTC or ETH. Now you can choose a coin, check the exchange rate and buy it.
Trading made easy with the Cointract App
Quite a lot of steps. At Cointract, we have set ourselves the goal of simplifying the whole experience.
With us, you can register within a few minutes (full KYC required), deposit CHF directly and get started right away. We automatically change your FIAT currency into USDT. Now you can get started.
Cointract also offers innovative features, such as automated trading. You can set rules for when you want to buy and sell your selected coin. If your set conditions are met, the Cointract avatar automatically completes the trade for you. The rules allow you to buffer the volatility of the crypto market.
In addition, we provide you with a lot of information that supports your decisions and allows you a "best execution". With labels like "bullish" and "bearish" as well as the trend barometer, you can get an idea of the current mood on the market. With the Coin Characteristics you get an overview of the coins based on five important market parameters.
Interested? Then we have another goodie for you: Just try out the app. In the first month, we will cover the trading fees. For you, this means: You trade for 0.00% fees* in the first month.
(*The trading volume for this promotion is limited to CHF 10'000. The offer is valid for the registration of a live account).
We look forward to seeing you again on the Cointract App!
This article is for informational / promotional purposes.