A Quick Introduction to Bitcoin and Trading Bots

Now that Bitcoin prices are hovering around $68,000, eager investors are going out of their way to learn about crypto trading. For beginners, understanding the crypto market and the way it behaves can be a challenge. The crypto market never shuts down; neither does it behave like the stock market. Prices here fluctuate dramatically and are characterized by extreme volatility. A newbie testing the crypto waters may find it easier to start trading through trade bots.

An Overview of the Bitcoin:

Bitcoin was the first amongst cryptos to enter the crypto space. It was launched a decade ago by Satoshi Nakamoto. It is a decentralized digital payment system which you can use for facilitating payments between parties in the absence of any middlemen. Unlike fiat currencies like the Euro or USD, no government issues or controls the Bitcoin and transactions are no conducted by third parties. Bitcoin is controlled instead by a “consensus” amongst a network of people called miners who agree to the Bitcoin protocol voluntarily. Transactions made between parties are validated and approved by this group of miners before being added to a block. The entire system is headless and available worldwide making it sustainable and corruption-free.

To know why people are making a beeline for the Bitcoin, you have to see what gives this asset its value. It has features that make it a store-of-value and the overall public sentiment agrees that the Bitcoin has value. People have believed gold is an excellent store-of-value because it is durable, rare, and divisible. Similarly, Bitcoin has a finite supply; there can only be 21 million Bitcoins. Bitcoin is divisible; each unit is referred to as a Satoshi and has value. Bitcoin is durable and there is a network of independent computers which can track BTC ownership. Transferring Bitcoins anywhere in the world is easy and hassle-free; it is secure and can be done in minutes.

The only problem with crypto trading is volatility; prices swing in a matter of hours making it difficult for traders to predict correctly. Bots make the work easier for investors. As a new investor, you may not be able to spend all your waking hours glued to the computer to monitor the market. Bots are software programs designed for doing this job and executing trades on your behalf. Sometimes, exchanges are overcrowded and transactions get delayed because of slowdown. In such situations, trading bots can be a godsend.

Bots have been controversial from the start, but there are many solid reasons to use them nevertheless. They can respond much faster than humans to market changes. They ensure you never have to lose out on profitable trading opportunities. Bots can be of different types; a popular one is the arbitrage bot. It exploits price differences of an asset across different exchanges. Others may use historical data for testing strategies to give you an edge over other investors. Investors can choose to use either free trading bots or paid ones. The idea is to choose one that will suit their interests. Every bot will have individual hardware and software requirements.

While trading bots can make your task simpler, you must know how best to utilize this tool to get the maximum benefit. You cannot view it as a get-rich-quick scheme. Rather, you have to be prepared to put in a lot of effort and time to make good trades with bots, because at the end of the day, they are only as good as their creators are.