What is Bitcoin?
Bitcoin is a type of digital currency. The very first Bitcoin appeared back in 2009 and rose to take the spotlight in 2017. Its founder is often referred to as Satoshi Nakamoto, but nobody knows the truth behind the creator of Bitcoin, his real name or even if it is a pseudonym for a group of people. Soon after the coin was implemented, its inventor left the project.
The cryptocurrency isn’t printed. It is mined with the help of computing power in an open distributed network. Network ‘rewards’ people with Bitcoins for their services. For example, for processing transactions and enhancing the overall security. The total quantity is limited. Bitcoin protocol allows miners to create up to 21 million coins.
Control over the entire Bitcoin network doesn’t belong to one person. It’s overseen by its community. Every user monitors the system. That’s how it differs from traditional currencies – it is decentralised, meaning there is no central authority, such as the Bank of England or Federal Reserve.
Bitcoin ensures total payment freedom – anytime – the network has no holidays and day-offs. Transparent, neutral and with blockchain technology at its core, Bitcoin code makes for ultimate honesty. Any member of the network can trace the details of transactions. Third parties are excluded, deals are straightforward and work on a peer-to-peer basis.
The Bitcoin currency is stored in a special software named the ‘Bitcoin Wallet’, available in many forms including hardware, desktop, mobile and web.
Bitcoin vs. Litecoin
Why trade Bitcoin CFDs with Capital.com
- Advanced AI technology at its coreA Facebook-like newsfeed provides users with personalised and unique content depending on their preferences. If a trader makes decisions based on biases, the innovative NewsFeed offers a range of materials to put him back on the right track. The neural network analyses in-app behaviour and recommends videos, articles, news to polish your investment strategy.
- Trading on marginProviding trading on margin (up to 1:2 for cryptocurrencies), Capital.com gives you access to the cryptocurrency market with the help of CFDs.
- Trading the differenceBuying a CFD on Bitcoin, you don’t buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of its price. CFDs trading is nothing different from traditional trading in terms of strategies. A CFD investor can go short or long, set stop and limit losses and apply trading scenarios that align with his or her objectives.
- All-round trading analysisThe browser-based platform allows traders to shape their own market analysis and forecasts with sleek technical indicators. Available on desktop, iOS and Android, Capital.com provides live market updates and various chart formats.
- Focus on safetyCaptal.com puts a special emphasis on safety. Licensed by CySEC, it complies with all regulations and ensures that its clients’ data security comes first. The company allows to withdraw money 24/7 and keeps traders’ funds across segregated bank accounts.
How to trade Bitcoin CFDs
Before starting trading CFDs on Bitcoin, you need to:
- Step 1Decide on its market direction. If you are convinced that Bitcoin will go up in value, then proceed with buying it, or going long. If you believe that it will fall, you sell, or, in other words, short Bitcoin.
- Step 2Decide on a size. Like in traditional trading, in CFD trading you can define the size of your trade.
- Step 3Decide on how much risk you can take. Stop loss function ensures that if the market moves against you, your position is closed automatically. But if the market takes another trend, you lose money.
Let's say you want to trade a CFD on Bitcoin – which is currently trading at $16,000/$16,005. You’ve carried out a trading analysis and, according to the results, Bitcoin will go up in price. You decide to go long and buy 50 CFDs on Bitcoin at price of $16,005.
Over the next two hours the price rises by $100. Your forecast was correct. Bitcoin is trading at $16,100/$16,105. You close the position by selling 50 CFDs at their new sell price which is $16,100.
To calculate your profit, multiple the difference in price ($95) by the size of your position.
95 X 50 = $4,750
The profit is $4,750.
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