A cryptocurrency (also known as crypto money) is a digital asset designed to work as a medium of exchange, alternative to government-issued currencies. Cryptocurrencies use cryptography to secure transactions, to control the creation of additional units, and to verify the transfer of assets. The transfer of funds is performed online, decentralized and independent of banks and governments.
Cryptocurrencies are classified as a subset of digital currencies and also as a subset of alternative currencies and virtual currencies.
Cryptocurrency has enjoyed a spike in popularity in recent years thanks to increased online trade and the improvement of the perceived security of online transactions using digital money.
How does Cryptocurrency work?
Cryptocurrency is considered a more secure, decentralized, and universal means of exchange, creating an alternative to the existing diverse monetary units. Decentralized cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is defined when the system is created, and which is publicly known. Cryptocurrencies are also referred to as substitute coins or alt-coins. A huge number of cryptocurrencies exist in the digital space, some more prominent than others, the most famous one being Bitcoin, which applies a proof of work scheme called “mining”.
Within cryptocurrency systems, the safety, integrity and balance of ledgers is maintained by a community of mutually distrustful parties (referred to as “miners”) who are members of the general public using their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular scheme. There is no third party validating any added transactions to the ledger.
CFD Cryptocurrency trading
CFD Cryptocurrency trading can be applied in two ways. Traders can either buy cryptocurrency with the intention to sell it at a profit, or bet on its value without actually owning any units using CFD trading. Trading CFDs on cryptocurrencies involves the following:
Opening an account
Researching the market
Defining your trading strategy
The advantage of CFD leverage lies in investing a small deposit to gain access to the full trade. However, both potential profits and losses are higher.