What about cryptocurrencies? Do they meet the same rules?
As far as the function of money is concerned, cryptocurrencies correspond to the same principles. As for their value, here too, it depends on the law of supply and demand of the markets. On the other hand, as far as its operation is concerned, we are not at all in the same technologies nor in the same centralized system:
First, the cryptocurrency has no physical support (coins, notes ..) It is a purely virtual currency. Moreover, cryptocurrencies no longer depend on banks or states and their economic or political interests. It is a decentralized currency.
As for its technology, it is quite revolutionary, based on mathematical algorithms, and on the principle of blockchain, developed by the designer of the first digital currency in 2009, Satoshi Nakamoto (alias, the character remaining unknown) Bitcoin.
These currencies are actually created by “miners”, who are thousands of individuals or companies who put the computing power of their computers to the services of this technology.
How to buy and sell cryptocurrencies with leverage?
When you want to trade on cryptocurrencies, you have two options:
- Acquire cryptocurrencies to try to sell them by generating a profit Cryptocurrency
- Anticipate the evolution of their price without owning it through CFD trading.
To open a CFD position on a cryptocurrency, you must:
1.Opening an account
As a CFD investor, you do not need to have a foreign currency account or portfolio to store your currency. An account at a CFD broker is enough for you.
Cryptocurrencies are less exposed to economic and political factors than traditional currencies. You must, however, familiarize yourself with the market on which you want to invest.
3.Apply your strategy
The choice of your strategy depends on your goals and preferences. The strategy applied is a key element of success in the more or less long term.
4.Place an order
Set the size of your position, the closing conditions and click on ‘Buy’ if you think that the value of the cryptocurrency will increase or ‘Sale’ if you think that it will fall.
5.Close your position
Once your goal is reached – or in order to limit your losses – you simply complete the reverse transaction to close your position: if you had bought, you would have to sell and if you had sold, you would have to buy.
CFDs are leveraged products, which allows you to increase your exposure in a financial market by stopping only a portion of your capital. It also means that gains and losses are magnified. Losses may exceed deposits.
Who issues the digital currency?
As for the functioning of current currencies, they are issued by the central banks of the different countries, which issue them according to economic and political imperatives.
These are so-called centralized currencies. Today, most trades made in traditional currency are made electronically (transfers, CB …), and therefore pass through the banks.
The value of these currencies depends
on the law of supply and demand on the digital currency markets.