Best Crypto Brokers: Crypto Trading Online
What are Cryptocurrencies?
Cryptocurrency is a digital currency designed to be transferred between people in virtual transactions. Cryptos are built by cryptography which makes them secure and difficult to counterfeit. Most cryptocurrencies are based on blockchain technology, a distributed ledger enforced by a disparate network of computers.
Cryptocurrency is decentralised and not issued by a central authority. Thus, it is not affected by government interference which makes it even more attractive. Cryptocurrencies are not physical objects, existing only as data.
Compared to more traditional methods, it is easier to conduct transactions with cryptocurrencies as transfer are simplified with the use of public and private keys. Transfer fees are minimal in comparison to other financial transactions.
Bitcoin was the first blockchain-based cryptocurrency and still remains the benchmark and most valuable to this day. There are now thousands of different cryptocurrencies with different specifications. Amongst the other currencies include: Ethereum, Ripple, Litecoin, EOS, and a number of derived currencies, including Bitcoin Cash and Bitcoin Gold. Whilst some are direct clones of Bitcoin, others are hard forks. This is the term for a cryptocurrency that separates from an existing one via a change to the protocol that makes the previously invalid blocks/transactions valid (or vice-versa).
What is Bitcoin?
Bitcoin was the first cryptocurrency that has the characteristics of traditional currencies but is verified by cryptography. Created by the mysterious Satoshi Nakamoto in 2008 as an electronic payment system based on complex mathematical algorithms, it still remains the most popular cryptocurrency today.
Bitcoins are built and stored electronically in a digital wallet app on a computer or smartphone. Bitcoins can be sent between digital wallets without passing through a centralized authority such as a bank or other payment gateway.
The three ways to get Bitcoins are to buy them with real money, receive payment in Bitcoins or to create them on a computer using a process called mining. Mining is simply the process of verifying a crypto transaction. People around the world transfer e-coins from wallet to wallet, while miners use huge computer processing power in order to maintain the blockchain and verify transactions. When a new crypto is released, the founders will announce how many coins will be mined. After that quota is reached, no further coins can be produced.
Bitcoins can be spent fairly anonymously which makes them popular although every Bitcoin transaction is recorded on a public list known as the blockchain, nobody would know which account number belonged to you unless you told them. Although this is an attractive proposition for some, it does mean that Bitcoins can be used for trading on the black market, specifically the dark web.
What is blockchain?
A blockchain is an ever-growing record of transactions made with bitcoin or any other cryptocurrency that is maintained across a series of computers which are linked via a peer to peer network.
This list of records is referred to as blocks and they are linked to each other using cryptography. Due to its design, blockchain is resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The blockchain is continuously growing and is open to anyone. When a new block is generated, it is sent to all users within the network. Each user then verifies the block and it is added to the blockchain. Each block in the blockchain contains:
- The details of the sender, receiver and amount of e-coins.
- A hash, which serves as a unique fingerprint.
- A hash of the previous block in the chain.
Why trade Cryptocurrencies?
Cryptocurrencies are a unique asset class with several factors that make them unique and attractive in comparison to other markets.
Cryptocurrency trading is a 24-hour market, seven days a week. Traditional markets such as forex, stocks and CFDs tend to operate 24/5. Crypto trading is open to everyone, with the average investor usually trading USD for cryptocurrency on a market and avoid the complexities and investments of mining cryptocurrencies for themselves.
Cryptocurrencies are not “fiat currencies”, they are not under the control of the government so one economy does not have a stranglehold over the crypto prices. Cryptos react to a wide range of different events including Brexit and Trumps election, these saw crypto prices soare due to uncertainties over traditional fiat currencies. Unlike other asset classes (FX, Indices, Commodities, etc.), the Cryptocurrency market is dominated by retail speculators.
Cryptocurrency trading allows traders to diversify their investment portfolio, as cryptocurrency price is primarily determined by the market sentiment, demand and supply
Cryptocurrencies, especially Bitcoin, can be very volatile which means there is an opportunity for traders to catch rapid and frequent price movements.
One of the main advantages of trading cryptocurrency is that it allows traders to buy, trade and invest without the need to rely on banks or any other financial institutions. Anyone with a crypto broker account can trade cryptos.
Best Crypto Brokers
What makes a good Cryptocurrency broker?
Now we will take a look at some of the most important factors to consider when choosing a crypto broker.
Crypto broker trading hours
Due to the fact that cryptos can be traded 24/7, a good crypto broker will have their trading platform and cryptos available all of the time. Even though it is a 24/7 market, some brokers will still shut down on weekends.
Most crypto brokers will offer the most popular cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Ripple (XRP) and EOS. If you would like to trade other cryptos, check that they are available through the brokers trading platform. Also consider what other trading instruments they offer if you are planning on trading other markets now or in the future.
Crypto broker leverage
Cryptocurrency leverage is usually lower than that compared to forex and CFDs. This can be a good and a bad thing. The good is that you must trade within your means whereas the bad is your position sizes are limited. Check that the crypto broker offers suitable leverage to you on their crypto offerings and make sure that you have a clear understanding of what leverage is and the risks involved with trading leveraged products.
Crypto broker minimum investment
As cryptocurrencies are a relatively new asset, you may want to only start trading with a small amount to test the waters. Therefore, check the minimum deposit requirement from the broker and consider starting on a demo account to begin with.
Crypto broker trading platforms
If you are well versed on a particular trading platform and wish to keep using it, check that it is offered by the broker. MetaTrader 4 (mt4) is the most popular and widely used trading platform which most traders find user friendly. One of the other main advantages of mt4 is that most online trading brokers offer it. Thus, it could make any potential transition to another broker in the future easier.
Crypto broker liquidity providers
When choosing the best crypto brokers, it is worth considering the liquidity providers (LP’s) that the brokerage implements. A liquidity provider is a company or an individual that quotes both a buy and a sell price in a financial instrument or commodity held in inventory.
Each liquidity provider streams through a direct feed of executable buy and sell prices to the broker. The broker will then usually select the best buy price and the best sell price, which result in the best available spread.
Thus, it can be important that the broker has a variety of top-class liquidity providers to ensure that they can offer some of the best possible prices across a range of different assets during various market conditions. Liquidity providers can be global banks, financial institutions and other market makers.
Liquidity Providers include First Prime Broker “B2Broker” who are offering Forex, CFD and Cryptocurrency liquidity via multiple ways of connection, focusing mainly on the Crypto liquidity. They offer aggregated liquidity on cryptocurrencies, using aggregator MarksMan. B2Broker serve as a major provider for Forex Brokers, Crypto Exchanges, some banks and other Prime Brokers.
Crypto broker customer support
Make sure that the crypto broker provides prompt support, ideally 24/7 as cryptos are available to trade around the clock, seven days a week. Ensure they offer a method of contacting support that you prefer. Some traders like to speak directly to support over the phone whereas others find online chat more convenient. The location of the broker should also be considered due to time differences although most established brokers will have multilingual support teams located around the globe.
Crypto broker regulation
When choosing a broker for crypto trading, you should check that they are regulated by a relevant government authority. The most respected regulatory authorities to look for include the Australian Securities and Investment Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC) and the Financial Conduct Authority (FCA). Regulated crypto brokers can provide more protection to traders than an unregulated broker can.
Best Crypto Brokers: Cryptocurrencies
How to trade Cryptocurrencies?
Trading cryptocurrencies with an online cryptocurrency broker is relatively similar to trading other markets such as forex and CFDs. You simply buy and sell them as and when you want to, attempting to profit in the difference between prices. The volatility of cryptocurrencies, especially Bitcoin, has made them a popular choice among new and existing online traders across the globe.
In order to speculate on cryptocurrencies, you will need a crypto broker trading account. You can find a crypto trading broker from our best crypto brokers on this page. Once you have completed the quick sign-up process, you can fund your account and choose the cryptocurrencies that you wish to trade.