The Cryptocurrency Trading Bible In 2022
Conventional currencies are the US Dollar, Indian Rupees, British Pound, Euro, etc. Cryptocurrencies are digital currencies, i.e., they are held in digital form on the internet. They are also known as virtual currencies or cryptos and have multifarious uses, including payments for other goods and services.
Ordinary currencies are traded against each other in the foreign exchange market, while cryptocurrencies are traded against other specific cryptocurrencies. Such trading is carried out on specialized platforms known as cryptocurrency exchanges.
Unlike conventional currencies, the supply of which is controlled by the Central Banks of the respective countries, the supply of cryptocurrencies is not controlled. There is an online public ledger called the blockchain, and the cryptocurrencies are controlled by complex cryptography. This can be viewed on request. There are no internal or external administrators for cryptocurrencies or their exchanges. Some central banks recognize it, but there is limited acceptance among others.
Starting with Bitcoin in 2009, there are now more than 13,000 cryptocurrencies. Ethereum, Tether, Binance, Polkadot, Stellar, and USD Coin are a few.
Few important aspects of cryptocurrency
- 24 hours trading: Unlike conventional currencies, cryptocurrency trading transcends national borders and is available 24 hours.
- High level of volatility: The volatility of price fluctuations seen in cryptocurrencies is unprecedented. In this respect, they are somewhat like conventional currencies, except central banks do not intervene to stabilize them. There is a high potential for loss, and cryptocurrency trading is risky.
- Privacy and anonymity: On some decentralized cryptocurrency exchanges, private details and KYC are not required to be submitted.
- Similarities with equity markets: All derivative instruments associated with equity markets, such as futures and options, have already been ported to cryptocurrency markets.
- Easy account opening: It takes only minutes to open an account.
Main cryptocurrency trends to watch out for in 2022
- Bitcoins and other cryptocurrencies are mined by high-powered computers which solve complex mathematical puzzles which guzzle energy. According to the University of Cambridge, these computers account for 0.5% of the total global energy consumption. Bans may be imposed due to the environmental decline caused by this huge volume of energy consumption.
- Central banks’ conventional currencies go digital. As digital payments become the norm, the CBDCs (Central Bank Digital currencies) have become the norm. Russia, Chile, Japan, and Sweden have already started tests and trials. Widespread use in online transactions of CBDCs could undercut the cryptocurrency demand.
- On the opposite end of the spectrum, certain countries might adopt cryptocurrencies as legal tenders like El Salvador.
- With central banks rolling back quantitative easing and launching interest rate increases, the volatility in crypto-denominated assets has reached unprecedented levels. Like all products and commodities, cryptocurrency prices are driven by demand and supply. A medium-term bearish trend seems to be in place for cryptocurrencies.
- A First Bitcoin denominated spot Exchange-traded Fund is likely to be established.
- Emphasis on Defi: Defi refers to umbrella financial services on peer-to-peer blockchains, primarily Ethereum. As Bitcoin value sharply depreciates, Defi systems could become a key growth area. Their total value as of the end of 2021 has already exceeded USD 200 billion.
- Regulatory changes could have a large impact on the cryptocurrency markets in 2022 as countries like China and US either completely bank or crackdown on certain market aspects. They could be declared illegal and not securities. The amount of collateral and leverage in cryptocurrencies is in question.
- Cryptos are increasingly used in gambling. The guaranteed anonymity, low transaction costs, and enhanced security make it a very attractive asset to be used in casinos. There is a streamlined account verification process and no delay in third-party transaction approval. However, regulatory changes could have an impact on these.
- New generations of black chain solutions are likely to emerge, which will increase speed and scalability. The fourth generation of blockchain technologies is expected to resolve trust challenges and accelerate the operation of business networks.
- There is likely to be increased standardization and interoperability due to cross-chain technologies. This will help transmit value and data across blockchain networks.
- There will be increased demand for blockchain as a service. Cloud-based platforms are already creating apps and blockchain function vendor infrastructure. Amazon and Microsoft have already started this process.
- The demand for cryptocurrency professionals is likely to increase. Professionals with cross-sector skills, experience with crypto, and immersive live casino skills are likely to be headhunted.
Cryptocurrency is a growing and evolving sector despite all the risks inherent in its trading. This is also a field where there is a paucity of experienced professionals. Doing a course in cryptocurrency or financial technology and gaining practical experience is likely to create bright career prospects.