Conditions and Triggers

• Simply asking Coinrule to send recurring orders on the market at a specific interval of time. The order will hit the market according to your selected time interval.

• Request to check for a particular condition and ONLY IF that condition is met, send an order as defined in the following section below. Add an additional condition, if needed, selecting the option “Add Condition”.

• A Direct order that will be executed on the market right after clicking on the Launch button. The trading interface of some exchanges could be complex, so Coinrule makes it easy to send an order in just a few clicks.

Which coins to Trade?

First, you can choose the group of coins or a specific coin that meet your condition. The options are:

• all available coins on the market
• all coins in our portfolio
• one or more specific coins

Select the indicator

Then, it’s time to set up the actual condition you want to occur to trigger the order. You can choose between:

• Price, that can be used both in absolute terms (selecting a specific price level) or in terms of percentage moves. Read more about how to optimise the timeframe of your price triggers here.
• Volume, that is the aggregate traded volume of that coin over the previous 24hr. Coinrule uses a third-party provider, which is Coingecko.
• Market Cap, this makes sense especially if you want to segment your trades on coins above or below a certain Capitalisation. Strategies based on low-cap or high-cap coins or tokens are very easy to setup with Coinrule.
• Relative-strength index (RSI)
• Moving Averages

You are now ready to define the next step of your Coinrule trading bot!

Automated Trading on Binance Futures

Using Coinrule, any trader can automate their leverage trading, opening the door to new possibilities. Leverage trading allows traders to take advantage of almost-unfathomable opportunities to grow their capital – 125x!

Leverage trading allows traders to open leveraged positions, meaning that they borrow funds against collateral to buy more than they could with their original capital. Doing this enables traders to increase the size of their positions, allowing them to increase their profit. 

If a trader has $1,000, he can open a regular position in Bitcoin; this will result in him holding 0.048 BTC. However, with leverage, he can now open a position valued up to $100,000, approximately 4.84 BTC. If the price moves up by 1%, the trader’s return would be $1,000 instead of $10 without leverage.

Setting Margin On Binance

Once you have linked your Binance Futures account to Coinrule, you will need to set the leverage level you will be using to trade. Binance allows leverage trading up to 125x, and you can adjust the leverage by clicking on the icon that displays the current margin level. 

Additionally, you can select the type of margin mode you prefer. Selecting “cross” allows you to share your margin across all positions. This aids in avoiding liquidation; however, in the event you are liquidated, you risk losing all your funds. 

On the other hand, by selecting “Isolated”, you can isolate each trade independently, meaning that you allocate a specific amount of margin to each position. In this case, If the margin ratio reaches 100%, only your position will be liquidated. Once selecting the settings you are comfortable with, you can then make your way to the Coinrule Dashboard and begin trading.

Smart Limit Orders

Limit orders are orders that you place on the order book, with a specific limit price. When placing a limit order, the trade is executed when the market price reaches the limit price set or higher.  

When using Coinrule, the limit price selected is the price at the moment conditions have been met, plus the safety margin that was chosen from the settings page as shown below.

An example of this is if you have an order where the price condition for execution is at $100, if the safety range is 0.5%, the limit price is $100.5. If the safety range that is selected is 0, the limit price will be the same as the price triggered. Setting up a safety range helps ensure a maximum number of executions. 

Order Size

When creating a rule and considering contract size, one contract is equivalent to the price of that coin. Thus the value of one contract may vary vastly from one coin to another. An example would be in the case of ChainLink; one contract of chainlink would be worth approximately 12$ while one contract of Bitcoin is currently worth $19,438. Thus, when creating the rule, it is vital to consider contract size to avoid unintentionally opening large positions. 

Use Leverage While Managing Risk

Managing risk is a must when trading with leverage, a typical practice between professional traders is using stop-losses on all their positions to protect themselves from large unforeseen losses. For beginners, this is not common.

This can be done easily with Coinrule, and many different variations can be created for rules that incorporate stop losses. Using Coinrule, users can create rules that trade crypto derivatives according to pre-set conditions. Here’s an example:

Connect your wallet and get started with automated trading on Binance Futures.

Start trading with leverage on Coinrule today!

Why Market Liquidity Matters

When building an automated trading strategy, not only do you have to make sure you create an effective trading system. You also need to make sure to apply it to the right asset. Assessing the market liquidity is a critical aspect that can have a significant impact on your trading performance. Why  does market liquidity matter so much, especially when running an automated trading system?

The market liquidity may affect your trades, forcing you to buy at sub-optimal prices and causing sub-optimal executions when selling. The bid/ask spread is the main gauge of the liquidity of an asset. That’s why it’s essential to have a clear perception of why market liquidity matters. You can read more about the trading jargon here.

Market vs Limit orders

Market liquidity impacts how quickly you enter into a trade and, then, how easy it is to close it. In some cases, it may be expensive to open and close positions quickly if the liquidity of the market is poor. Let’s see what options traders have to buy and sell on the market.

The first concept you need to keep in mind is the difference between these two ways to trade assets.

A market order is an instruction to buy/sell at the best market conditions available in that specific moment, no matter what would be the final executed price. 

Buying or selling at market allows you to trade in the quickest way possible, but it doesn’t guarantee the price at which your trade will be executed.

A limit order, instead, is an instruction to buy (sell) an asset but not at a price higher (lower) than the one specified.

Trading using limit orders guarantees you to avoid unexpected executed prices but could result in a delay of the fill, or, eventually, it could prevent a trade from being completed.

An automated traded strategy requires fast executions once the bot generates the trading signal. So a market order is the most appropriate choice. That means that you should avoid liquidity traps that could negatively affect your strategies.

How does market liquidity impact your automated strategies?

The market liquidity impacts your trading system, both creating false-signals that trigger the orders and resulting in execution at non-convenient prices.

The condition

If the bid/ask spread is large, each trade that will occur on the market will have a relatively significant percentage change from one order to the next.

Here you can see the order book of HOTBTC on Binance. The coin has a very low price, and since the minimum tick size is one Satoshi, it creates large price changes. If the last traded price is 6 sats and the following trade comes at 7 sat, that corresponds to a price change of 16%. That is for sure not a signal of a price rally for that coin!

If we try to plot Moving Averages and the RSI on the price chart of HOTBTC, clearly they don’t provide any useful signal that you can use for trading purposes.

Coins with very low prices, or with very low liquidity may present similar patterns and trading them with an automated trading system may result in unexpected losses.

The order

Not only large bid/ask spreads and low liquidity impact your trading system negatively by providing wrong signals, but they also cause orders to execute at inconvenient prices.

This is the order book of BTCEUR on Kraken, a very liquid exchange. As you can see, there is no relevant difference between the best bid and best ask price. You can buy and sell Bitcoin without encountering significant slippage of price. 

Here is another example, in this case, you can see the order book of MLNEUR on the same exchange. The spread between bid and ask is roughly 0.5%. That means that if the bot signals a buy-order when the last traded price is 3.714, the actual price at which your trade will execute will be 3.732. Of course, if the size of your order is relatively large compared to the liquidity offered in the order book, the slippage effect will be larger as you will get executed at sequentially higher prices.

How does Coinrule solve the liquidity problem?

Our trading engine has some price filters in place that prevent triggers from activating if the price of the coin is very low. 

For example, if you set a rule to execute if “any coin has price decrease by 10%”, the trading engine will exclude trading pairs like HOTBTC from being checked. If these filters weren’t in place, every time a trade occurs on the HOTBTC market, the condition would be met (as the spread between bid/ask is currently 16%), and the bot would send a market order that will likely result in losses for the trader.

This is a smart approach that allows the rule to trigger only if the price change has a specific trading relevance. 

Another way to avoid buying less liquid coins is to add a filter for market capitalization when setting up your rule. Generally, coins with a high market cap have higher liquidity, and their order books present tight bid/ask spreads.

A rule like the one in the example above makes sure that all the coins that the bot will buy and sell meet an adequate liquidity standard which will improve the results of your strategy significantly! 

There is a reason why Bitcoin, Ethereum or other major coins have such high trading volume. Traders love to trade them because they can jump in and out from trades at convenient prices, without incurring significant slippage. That’s the reason why market liquidity matters!

Nevertheless, there are many opportunities every day on the market across dozens of other relatively liquid coins.

Coinrule allows you to take advantage of all these opportunities with measures that help reduce the risk of trading less liquid coins.

3 Common Trading Mistakes

Embarking on your journey as a crypto trader is exciting, but success requires more than enthusiasm. To build a strong foundation, it’s essential to understand and avoid common trading mistakes that can derail your progress. Whether you’re a beginner or an experienced trader, sticking to key principles will help you make informed and disciplined decisions.

In this article, we’ll explore the most common trading mistakes and how to avoid them, empowering you to create successful strategies for the long term.

1. Risk Management: Only Trade What You Can Afford to Lose

One of traders’ biggest mistakes is risking more than they can afford to lose. Even the most confident analysis or strategy can falter due to unexpected market movements.

Key Risk Management Principles:

• Accept the Possibility of Losses: Markets can be unpredictable. As the saying goes, “The market can stay irrational longer than you can stay solvent.”
• Maintain Financial Stability: Never compromise your financial security for the sake of a trade or multiple consecutive losses.
• Start Small: Begin with smaller trade sizes and increase gradually as you gain confidence.
• Use Demo Accounts: Platforms like Coinrule offer demo exchanges where you can practice without financial risk.

Pro Tip: Always use stop-loss orders and other risk management tools to minimize losses and protect your capital.

2. Create and Stick to a Clear Trading Plan

Jumping into trades without a plan is a recipe for disaster. Random decisions based on immediate market conditions often lead to poor outcomes.

Steps to Create a Solid Trading Plan:

1. Assess the Market: Analyze the broader market environment and trends.
2. Define Objectives: Identify specific opportunities and set clear goals for your trade.
3. Develop a Strategy: Use proven templates or create custom strategies based on your analysis.
4. Stick to the Plan: Avoid deviating from your strategy unless there is a clear and rational reason.

Coinrule Advantage: Coinrule provides a range of pre-designed trading templates to help you build a structured and effective trading plan with ease.

3. Manage Emotions: Keep Feelings Out of Your Trades

Emotional decision-making is one of the most common and dangerous trading mistakes. Whether it’s excitement over a winning trade or fear during a loss, emotions can cloud your judgment.

How to Manage Emotions in Trading:

• Avoid Overconfidence: Don’t let profits make you reckless. Stick to your strategy.
• Stay Calm During Losses: View losses as part of the process and use them to refine your approach.
• Use Rational Signals: Base your decisions on market data and pre-defined indicators, not gut feelings.
• Size Your Trades Carefully: Smaller trade sizes can reduce the emotional impact of both gains and losses.

Automate to Control Emotions: Automated trading tools like Coinrule help remove emotional biases by executing trades based on logic and pre-set rules.

4. Common Trading Mistakes to Avoid

Here’s a summary of frequent errors traders make and how to sidestep them:

Why Automation Helps Avoid Trading Mistakes

A trading bot can significantly improve your performance by reducing human errors and emotions. Here’s why Coinrule is the ideal platform for both beginners and seasoned traders:

• No-Code Strategy Builder: Easily create automated trading strategies without technical knowledge.
• Real-Time Execution: React instantly to market changes with pre-set rules.
• Risk Management Features: Implement stop-loss and take-profit orders effortlessly.
• 24/7 Trading: Take advantage of market opportunities anytime, even when you’re away.

Try it now and create your automated trading strategy with Coinrule.

Conclusion

Avoiding common trading mistakes is crucial for long-term success in the crypto market. By following essential principles like risk management, sticking to a trading plan, and controlling emotions, you can confidently make informed decisions and navigate the volatile market.

Platforms like Coinrule empower traders with automated tools to simplify strategy implementation, reduce errors, and maximize potential gains. Leverage Coinrule’s powerful features to start your journey to becoming a confident and disciplined trader.

Trade smarter, trade safely!

Crypto Trading Jargon Explained

It’s time now to explain some of those confusing terms you will encounter while using crypto tools, trading on crypto exchanges or reading crypto news. 

Crypto exchanges are online sites where users buy and sell cryptocurrencies between each other. Within an exchange, the orders of the traders set the price. In some other cases, you will buy or sell cryptocurrencies while having a company, not an individual, as your direct counterpart. That will usually mean higher fees. To make this more clear, when you log in to, for example, Coinbase or Bitpanda, you trade crypto at a price set by the exchanges (of course generally aligned to the general market conditions). Instead, if you use Coinbase Pro or Bitpanda Global Exchange, the exchanges will match your orders with those from other market participants.  

Each exchange receives all the buy and sell orders on a specific trading pair and arranges them by price and timestamp into an order book, which constitutes the market for each trader on that exchange. The buy orders are called bids since traders are placing a “bid” to buy a certain cryptocurrency. On the other hand, the sell orders are named asks because this is the price that a trader “asks” to sell at. To avoid confusion, when we generally refer to the “price” of a cryptocurrency, we are not talking either about the bid or the ask price, but about the last traded price. 

It’s important to underline this concept because there isn’t a unique official price for each cryptocurrency but there is a last traded price for each exchange. Therefore every cryptocurrency has as many prices as exchanges list that coin. These price differences are a result of the fragmented nature of the crypto market. It’s not unusual to see significant price differences between different countries. Developing regions like Latin-America or South-East Asia are typical examples. There the price usually differs from exchanges in developed countries.

Another relevant term crypto traders should be accustomed to every day is volume. It stands for the amount of traded cryptocurrencies in a given period of time. Large trading volumes usually accompany strong trends. For instance, high volumes generally accompany a healthy upward trend. When the price rises with low volumes, that could signal that a reversal will come soon. 

The best order for each strategy

Depending on the trading strategy you want to pursue, you can send different orders. There are three types of orders. A market order refers to an order that will be instantly filled at the current market conditions. So if you send a market order to buy 1 Ethereum, your order will be executed at the cheapest ask price quoted at that moment on the order book. Depending on the size of your order in relation to the current available-to-sell coins, you might end up buying at a higher price than expected. That means that using market orders, you may pay more than you intended. 

Use this order when you want the order to be executed as soon as possible.

To avoid this, you may be better off using a limit order. Setting up a maximum price you are willing to pay when buying (or minimum price you demand to receive if selling) you have the warranty of not trading at undesired prices. On the other hand, you may need to wait for the market conditions to satisfy your request. Of course, the lower your limit price will be than the ask price (in case of buy orders), the lower the chances that you will have your order filled. 

Use this order when you want to execute your order at a specific price. If the conditions are not met, you don’t want to trade.

A third, more advanced, type of order is the stop-loss order that lets you set a specific price at which you want to sell in the future, in case the price dramatically drops. This type of order helps minimize losses, and I suggest always to add it to your trading strategies. When you set a stop-order, you are giving to the exchange the following instruction: “If the price drops by X per cent, I will sell my coins.” Does it sound familiar? 

A stop-loss perfectly fits the If-This-Then-That logic of the trading strategies that you can build with Coinrule. Setting up a stop-loss has never been easier than with Coinrule. 

Use this order when you want to protect yourself from significant and undesired losses.

Crypto trading jargon guide

Now that you know the basics of placing an order, you are ready to start trading cryptocurrencies. As a newbie in the crypto space, more advanced traders will consider you a noob. Here is a brief list of things you should avoid doing as a noob:

• Beware of shills. Shilling is a common activity of promoting projects and rules for personal purposes. You will read of ‘excellent’ and ‘promising’ projects that are in reality backed by nothing other than hot air. Always DYOR: ‘do your own research’ before buying a coin.

• Every time you witness a sharp price increase, think twice before jumping into the trade. Pump-and-dump is the favorite practice of large traders (also known as whales) that push the price higher to trap retail traders before dumping it soon after. Significant price increases make less experienced traders believe they will miss huge profit opportunities if they don’t buy. This feeling is generally defined as fear-of-missing-out (FOMO) and is one of the biggest threats while trading cryptocurrencies.

• Don’t believe everything you read about cryptocurrencies. Fake news is everywhere. Sometimes they target specific people, companies or projects, other times they try to cast a shadow of fear, uncertainty and doubt (FUD) on the industry as a whole. Always double-check the source and reliability of the news to avoid FUD. 

• Don’t get rekt! Before making money, you need to preserve your capital. If your losses erode all your investment allocation, you will be rekt. You will lose the opportunity to keep trading in the long term, missing the great opportunities that crypto trading offers!

You are now ready to start trading crypto!

Before you send out your first order, we have a few more pieces of advice for you.

What Kind Of Trader Are You?

There are countless trading strategies and approaches. These are the most common crypto trading strategies, learn how traders make money out of them.

The 4-seasons trading strategy doesn’t exhist

The first and most important thing to underline is that no approach is per-se better than another one. All trading styles have their own pros and cons and each trader should design his own based on his personal needs and inclinations. 

Day Trading

Day traders spend a lot of time staring at charts on the screens and very rarely keep a position open overnight. They use very short-term timeframes and very often trade with high leverage. Day trading is a full-time job and requires a robust trading method combined with rigorous discipline. 

You should try it only if you feel comfortable with activities involving high levels of stress. Among all traders, day traders are those that sleep more comfortably as they tend to close the trades when they are sitting in front of a screen.

Scalping

Scalpers push the concept of the day-trading strategy to its limits. A scalper seeks to make a profit out of very tiny price changes, focusing on extremely short-term time horizons. Recurring frequent small profits can turn out to be a very profitable activity. Nowadays, most of the scalping strategies are performed by automated trading bots that can easily handle dozens or even hundreds of trades daily. 

If the trading plan is well designed, entering and quickly exiting the market can significantly limit the risks and can create a real cash-machine for traders.

Swing Trading

Swing traders, on the other hand, try to take advantage of the natural “swing” of the price cycles. The main goal is to identify the beginning of a specific price movement and open a trade accordingly. Then they hold on until the movement stops and take profit or they plan an exit in case the trend of the price goes in the opposite direction.

Usually, swing traders adopt a top-down approach, analyzing the market from higher to lower time frames to get the big picture without constantly monitoring market conditions. Swing traders can open a trade and hold it open for weeks or months depending on the time frame of the trading idea. 

So now that you know more about different trading styles, which one do you think fits you the most? 

There are two main methodologies traders use to decide what and when to trade Bitcoin: Technical Analysis and Fundamental Analysis.

Day traders, Scalpers and Swing traders generally use the former.

What is Technical analysis?

Technical analysis tries to predict the price by studying what happened in the past through the analysis of past price movements and trading volumes. It seeks patterns and trends in the price which may occur again in the future.

Technical analysis implies that no matter what’s currently happening within the context of that specific asset, the price already incorporates all the information the trader needs to build his or her investment decisions.

What is Fundamental analysis?

Fundamental analysis looks at the big picture in the crypto business evaluating the news about the industry, about each coin, the technical developments of the Technology (e.g. ‘improvements in the Lightning network’), or the progression of regulations around the world. 

Summarizing the main difference between Fundamental and Technical Analysis we can say that the first has a forward-looking approach, in the sense that the forecast how the market will evolve in the future and what will be the primary drivers or the price tendencies. Technical analysis has a backwards-looking approach and relies on constantly assessing conditions and variables. 

So, which methodology is the best?

Probably no one is better than the other, and a blended approach is recommended. Also, it can make sense to use Technical Analysis mainly to explain short and medium-term moves and trying to forecast the long term direction of the trend with a more Fundamentals-based approach.

Let’s now dig deeper into the topic. One common constraint when approaching Crypto trading is the jargon.

Many words are typically used in this context and to many newbies they are non-familiar. Read more here.

Crypto Whales Explained

What is a crypto whale?

In the cryptocurrency world, the term “whales” refers to large holders of a particular cryptocurrency who have the potential to significantly influence the market by buying or selling large amounts of coins.

Although we often call a wealthy individual a whale, the term can also describe an institution or organization that holds a significant amount of cryptocurrencies, and thus, have the power to move the markets up and down.

For example, if a whale were to buy a large amount of a particular cryptocurrency, the demand for that coin would increase. This would lead to an increase in price. On the other hand, if a whale were to sell a large amount of a particular cryptocurrency, the supply would increase, leading to a decrease in price.

It’s important to note that not all whales have the same motives or goals. Some whales may be long-term investors who are simply holding onto their coins for a period of time. Other whales may be short-term traders who are looking to take advantage of market movements.

In general, the presence of whales in the cryptocurrency market can have both positive and negative effects. On one hand, they can provide liquidity to the market and help to stabilize prices. On the other hand, their large trades can also create volatility and potentially lead to market manipulation. As a result, it’s important for individual investors to be aware of the potential influence that whales can have on the market, and to carefully consider the risks involved before making investment decisions.

When it comes to Proof of Stake (PoS) blockchains, whales have a considerable influence in on-chain governance processes (more funds at stake gives them more voting power). For these chains, the presence of whales can be both a good sign (in terms of stability) as they have strong incentives to act honestly and help the network grow. On the other hand, having whales controlling the majority of funds can bring a negative effect in regards to power centralization.

Cryptocurrency: A Beginner's Guide

What is Cryptocurrency?

A cryptocurrency is a digital currency that uses cryptography as a means of security. Most cryptocurrencies operate without the need for a central authority like a bank or government, and operate instead through a distributed ledger to spread power among its Community. Cryptocurrencies are decentralised systems that allow for secure online transactions through the use of public and private keys.

One of the first and most popular cryptocurrencies is Bitcoin, which was created in 2009. Since then, thousands of other cryptocurrencies have been created, each with its own unique features and use cases.

Cryptocurrency transactions are typically fast and inexpensive, and they offer a high degree of anonymity compared to traditional banking systems. 

Overall, Crypto is a rapidly evolving technology that has the potential to change the way we think about money and financial transactions. While it’s still in the early stages of adoption, it has already attracted a large following of proponents who believe it has the potential to revolutionise the financial world.

How Does It Work?

In order to use cryptocurrency, you need a digital wallet that can store your coins and enable you to send and receive payments. When you send a payment, the transaction is verified and recorded on a public ledger called a blockchain. This ledger is maintained by a network of computers around the world, and the integrity of the system is ensured through the use of complex mathematical algorithms.

A blockchain consists of blocks, which hold individual transaction information. This information is timestamped and posted to the ledger so that each transaction can be verified by other blockchain stakeholders and never be altered. In order to conduct a transaction on the blockchain, users agree to pay a small fee, which helps maintain the security of the blockchain itself.

Let’s say you want to send your friend a small amount of Bitcoin. You create a transaction using your Bitcoin wallet and request to send Bitcoin to your friend’s wallet, agreeing to pay a nominal transaction fee along the way. After you make the transaction request, your transaction gets grouped with other transactions into a block on the Bitcoin blockchain. This block is verified by miners and posted to the blockchain, making the transaction complete.

Through this process, you can send cryptocurrency to anyone, anywhere around the world, with low transaction fees. Want to send $1 million Ethereum to your family in France? Go right ahead! Not only will the transaction usually be completed in a matter of seconds or minutes, it will only cost you a fraction of the fee you would have paid using a traditional money transfer service.

What is Cryptocurrency Used For?

One of the early appeals of cryptocurrency was that it offers you the opportunity to transfer large amounts of your wealth anonymously without any government or institutional interference. These days, cryptocurrency is used by some owners to take care of routine matters such as paying bills. 

Still others put their digital currency to use by investing in business start-ups. The combination of innovative tech ventures and cryptocurrency seems like a natural fit. You can also use your digital currency to travel the world. Arrive at your destination in the luxury vehicle you purchased with your cryptocurrency or on the airline that readily accepted your Bitcoin.

What is Cryptocurrency Mining?

Cryptocurrency mining refers to the reward gained from verifying transactions on a blockchain. Blockchain transactions are encrypted when added to a block. Therefore, these transactions need to be verified for accuracy before the blockchain can continue adding transactions to the next block. This is where miners come in. Miners use their computing power to solve complex mathematical problems to verify transactions in a block on the blockchain. This process requires a lot of computational power and energy, and the difficulty of the problem is adjusted regularly so that new blocks are added to the blockchain roughly every 10 minutes. As a reward for their efforts, miners receive a certain number of newly created coins and also a small transaction fee from the users who made the transactions that are included in the newly added block.

The process of cryptocurrency mining requires specialised hardware, such as a specialised computer called an ASIC (Application-Specific Integrated Circuit), which is designed specifically for mining purposes.

In summary, cryptocurrency mining is a process that verifies and adds new transactions to the blockchain ledger and creates new coins as a reward for the miner who solves a complex maths problem.

Why is Cryptocurrency Popular?

With cryptocurrency, there is a new way of transacting and storing value that is markedly better than traditional fiat. In fact, cryptocurrencies fare better in many of the properties that are needed for sound money:

• Portability — How easily the currency can be transported
• Divisibility — The degree to which currency can be divided into smaller amounts
• Censorship Resistance — The ability for governments and regimes to censor its use
• Scarcity — How prevalent it is in society and its future supply
• Security — How secure it is to use
• Backing — Who is backing the legitimacy of the currency

With fiat currencies, nations can print and restrict the printing of money however they please, so the value can occasionally fluctuate. For those living in countries with hyperinflation and unstable economies, cryptocurrencies may be a better choice for storing value than fiat currency. Cryptocurrencies have a set, defined monetary policy that cannot be changed by anyone, regardless of who they are. For example, there will only ever be 21 million Bitcoin created, with no exceptions. Knowing this creates a sense of stability that cannot be found in the monetary policy of fiat currency.

Cryptocurrencies are also easier to transport and divide. As opposed to lugging around pounds of gold or huge wads of cash, cryptocurrencies are just pieces of information that are used to keep track of transactions and values. These can be transported across any border without censorship, and even be divided into fractions of a penny if desired.

Why Do Cryptocurrencies Have Value?

It seems strange to some people that cryptocurrencies have value when most of them are not official products of a sovereign nation. However, the misunderstanding goes hand in hand with a misunderstanding of the definition of currency. Simply put, currency is anything that buyers and sellers agree will serve as a form of exchange between them.

There are enough investors and traders of cryptocurrency to make it an attractive form of currency to people around the world.

Is Cryptocurrency Safe?

Let’s look at two aspects of cryptocurrency safety: investment and storage.

Of course, cryptocurrency carries risk like any other investment. However, the gains and losses of cryptocurrency tend to occur much faster than with other currency investments. Successful traders and investors have built digital fortunes thanks to the volatility of Bitcoin. However, others who weren’t so lucky, lost their funds quickly.

Once you have acquired digital currency, you will want to keep it safe in a crypto storage device called a wallet. The encryption technology that these storage devices use to keep your currency safe continues to evolve to stay ahead of 21st-century digital thieves.