Cryptocurrency is no doubt a big step in financial evolution. It shook the financial industry over the last few years as it creeps forward to the reign of many traditional assets. Investors and traders came flocking to the world of decentralized digital currencies where secure financial transactions are achieved without the need for any government or central bank. What makes cryptocurrency trading advantageous compared with traditional assets?
No Middle Men
Traditional assets are traded in a strict and controlled centralized environment. Bids and offers for a specific asset are organized and tallied in a specific algorithm that runs on a single server on a physical location. Due to its centralized nature, there are a lot of restrictions to participate in trading. Traders should belong to the same jurisdiction, orders are handled in a first-in first-out method, and transaction clearings are handled by a third-party exchange that has authority over the trading process. Trading is not possible without the exchanges, brokers, and clearinghouses, and of course, the regulation of the government. Traders will then need to pay brokerage fees, commissions, and trading fees, among others, to continue to trade under these intermediaries.
Crypto asset traders have more freedom to trade in a borderless environment via cryptocurrency platforms. Although these platforms are also centralized, they provide fast and secure services without the unnecessary restrictions inherent in traditional assets trading. Users can trade any cryptocurrencies and derivatives online easily and conveniently using only web browsers or phone applications connected to the Internet—no border restrictions, no long-time waiting, and no excessive fees.
Liquidity
While it is good to have illiquid assets, having highly liquid assets is vital because you can easily access them when you need them. Liquidity refers to how you can easily convert an asset into cash. Cryptocurrency, most especially Bitcoin, is considered one of the most liquid assets thanks to the spur of many cryptocurrency exchange platforms and brokers around the globe. You can easily convert digital coins to cash and directly receive them to your bank account. You can also exchange them with other cryptocurrencies or even other assets like gold when needed.
Establishments accepting cryptocurrency, CoinMap
Cryptocurrency is also widely used as payment to goods and services. In fact, big companies such as Microsoft, AT&T, Expedia, and Twitch accept Bitcoin payments. Unlike traditional payment methods that can cost enormous fees, cryptocurrency payments have very minimal fees and transactions are completed instantly—the same goes for international fund transfers.
Constant Trading
It is essential for traders to carefully plan their trading strategies based on current market data to end up with a successful trade. Traditional asset traders are always on the lookout for news, quarterly reports, analyst forecasts, or any updates that might affect the traditional markets. The same goes for cryptocurrency traders as they closely watch newsbreaks that might affect coin prices. Between the two, crypto traders can react much faster against possible market shifts. Cryptocurrency trading is always active 24/7 wherever you are in the world. Traders can easily execute a trade with a computer or smartphone connected to the Internet.
On the other hand, traditional asset exchanges have trading schedule restrictions because they are regulated by the government. The stock exchanges, for example, observe weekends off, holidays, and clearing breaks in between, which can be detrimental to the trader’s successful trading decisions because of information delay. Additional restrictions also apply in different countries. For example, the US SEC imposed a capital restriction of $25,000 on day trading of US stocks and stock markets for pattern day traders. Thus, traders without enough equity will have limited trading ability. In contrast, crypto traders enjoy unlimited trading as long as they have funds. They can even easily borrow funds by leveraged trading. SimpleFX, a trusted cryptocurrency broker, offers up to 500x leverage to traders on their platform.
Minimal Trading Prerequisites
Stock exchanges are particularly strict in their registration process and require credentials such as personal identification, billing statements, and bank records, among others. Traditional asset investors and traders need legal documents or certificates to prove their identities and trading history. The verification process takes time too. Cryptocurrency trading platforms, on the other hand, provide a quicker way of signing up. Many reliable exchanges do not request bank details from their clients. Some top-notch brokers even require only an email address to create an account. This preserves anonymity, which is favored by many traders.
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