Secure Your Future!!!!

The Future is here, and it is and this time it is not the web. There are times in human history when advancement comes, and a new idea or movement becomes reality in an eye blink. That new movement and the idea that is dominating this century or time is cryptocurrency/NFT. Cryptocurrency came slightly before NFTs and has become a household name. Just look at the most famous cryptocurrency, Bitcoin. Who could have imagined what Bitcoin has become today when it was launched in 2009 apart from Davinci Jeremie. Davinci Jeremie, of Chilean origin, posted a video all the way back in 2013 advising people to invest and buy Bitcoin when it was trading at only $1. In today’s world, 1 Bitcoin is valued at $40,732.90. People all around the world are starting to accept Bitcoin as a form of payment and the people who went in early are reaping the rewards. Another famous cryptocurrency that surged in value over the past few years was the Ethereum coin. The coin launched in 2015 and has 1 Ethereum has a value of $3,050.24. According to data from Statista, the number of users of various and different cryptocurrencies has grown by sixty-six million between 2018 and the final financial quarter of 2020. This is further evidence that both private and public financial sectors are open and welcoming of the idea of utilizing cryptocurrencies to make payments, as an instrument of storage and saving it as an investment that contains rewards that can be acted upon later.

So what’s the buzz? Why are so many people from all walks of life tempted into investing and being involved in cryptocurrency? The main temptation is the decentralized financial system which is the opposite of the centralized financial systems that dominate today’s society and world. Decentralized financial systems, DeFi systems, can offer better transparency and better security when doing transactions compared to conventional financial processes. The speed and freedom that cryptocurrencies provide. Consequently, there have been crypto exchanges where users are verified through their identification cards and are free to do whatever they want with their cryptocurrency. These exchanges include Binance, Coinbase, OKX, CoinFLEX, etc. The biggest one by far however is Binance with 28.5 million users. I am also such a Binance user and use the app on a regular basis. Binance offers multiple functions for its users, and they include spot trading, futures trading, leverage trading, and margin trading. The ones that I utilize when using Binance are spot and futures trading. Spot trading occurs when a user invests BUSD, USDT, or other currencies with a card or bank account into a certain cryptocurrency coin. The price for that certain cryptocurrency is the market price listed and changes every minute. The best option for buying the coin is using BUSD or USDT instead of buying with a card or bank transfer since there are transactions involved. While the transaction fees involved are not that large and are fair game in terms of their amount going the other route allows the users to participate in another popular area of Binance, P2P trading. P2P, or people to people, trading is a marketplace where there are buyers and sellers, and both can trade with any cryptocurrency or currency. For example, if I want USDT then I would go to the P2P Trading on my Binance account and enter the specifics such as the way I want to pay the other user, currency, and amount. Once I entered those details there will be accounts of sellers that will have the details for where I deposit the transfer for the seller. This might be seen as risky because one can think about what happens if the payment is done but the buyer does not have the cryptocurrency. Well, this does not happen because Binance provides an option in which the funds are released after the transaction is completed. Once I contain the USDT in my account I can use that to buy which cryptocurrency I desire on spot.

One major similarity between spot and futures trading is that the price is determined by the market and can fluctuate at any minute or second. Furthermore, with both trading platforms, there is high volatility and there would exercise caution when using them. The benefit of futures, when compared to spot, is that futures trading allows the user to enter a stop loss and spot trading flows with the respective coin; when the coin goes down in value so does the value of your shares invested in the cryptocurrency. However, when doing futures trading the user can put a certain price called stop-loss where if the price of the coin goes beneath or dips underneath the stop loss then your shares are immediately sold, and the position is closed. Additionally, the user can put a take profit point where the shares in that cryptocurrency coin will be sold immediately, and the position will be closed but the user will walk away with a profit. One might ask why the user might want to put a limit on the profit that he or she can attain but due to the volatility of the market and the peaks and valleys being unstable, the stop loss and take profit are safety mechanisms put in place by Binance to ensure that users can manage their losses and profits. Another important point when dealing with Binance futures trading is leverage. The leverage available on the Binance ranges from 5x to 75x and the higher the leverage the more risker position the user is putting themselves in and the higher chance of liquidation. Futures trading could be considered a sort of gambling and the management of risk is entirely up to the user. Even if a user follows signals, foretelling how a coin is going to perform and can be attained from different sources such as telegram groups, those can help but are sometimes wrong therefore the users need to be good at controlling risk and managing losses and profits. If it reaches a point where the losses reduce the user’s USDT balance to nothing, then the user gets liquidated and must put more money in to enter the trading market. In a nutshell, the loss or profit in a futures contract/ position is the difference between whatever market price that the trader enters at and the market price that the trader exits at. There are two types of futures contracts: long and short positions. Long positions are when the trader expects that the market price will go up and short is when the trader expects the market price of that cryptocurrency to go decrease and go down.

Another important reason why Binance is a famous trading platform for cryptocurrency is that it has flexibility for the type of users it wants to attain. There are tools for experienced veterans when it comes to cryptocurrency and tools for people who are starting in cryptocurrency and want to understand the way the science behind the madness. For experienced veterans, there are the above-mentioned and discussed tools such as futures trading and other instruments such as margin trading and derivatives trading. Additionally, there are instruments for people just entering into cryptocurrencies such as Spot trading and conversion. Conversion is the easiest form of trading since it is just about converting between different cryptocurrencies. Spot trading and futures trading have already been explained extensively in the previous paragraphs. Margin trading is like futures trading because of leverage. In both forms, the strategies of traders are based on the idea of estimating how certain cryptocurrencies will perform and betting on that movement. However, there is one key difference between futures and margin trading: markets. While futures and margin trading require some sort of borrowing from the site consequently leading to a possibility of being liquidated; futures trading operates in the derivatives and margin trading operates in the spot market. Derivative markets include spectators, hedgers, and arbitrage. The spectator and hedgers are the two primary actors in the market, and they look for any arbitrage opportunity. An arbitrage opportunity is when traders make a profit in the smallest change of price for the respective commodities such as cryptocurrency. Spot markets operate in a similar way when it comes to margin trading but is different from the derivatives market because of third parties. In margin trading, the trader can borrow funds from a third party thus making it a possibility to borrow much more funds to operate in the trading and earn large profits. In both futures and margin trading, there needs to be a large capital if the trader wants to earn large profits however in margin trading borrowing is unlimited via third parties and futures trading allows borrowing to a certain point, and from there on it is the traders own capital that will be affected in trading.

While this article heavily focuses on Binance there are other apps such as crypto.com etc. The platform that you are trading in does not matter but what matters is that you are somehow involved in the cryptocurrency market. There are many that believe that cryptocurrency is useless since it is not pegged to something. Pegging can be seen with multiple currencies around the world. Most currencies are pegged to the dollars of the United States, so their exchange rate is fixed to the USD since that currency is one of the most stable and far-reaching currencies in the world. Taking it back to cryptocurrency there is no pegging which means no safety net or insurance/guarantee for that cryptocurrency. Consequently, if the prices of shares held in a certain cryptocurrency were to go down, so would the money value the investor had in that cryptocurrency. This is the reason why some people do not see value in cryptocurrency however this market is still young and has much more development. This might seem contradictory to Bitcoin’s absurd value, but this coin was the pioneer and trailblazer and there has still not been a cryptocurrency that has come close to Bitcoin’s value. Furthermore, the recent blockchain technology, that is currently used for NFTs, points to a future where the cryptocurrency can be backed up by that digital age technology and this can give more confidence to people who are not entering cryptocurrency now because of the fear of cryptocurrency not being guaranteed by anything.

Another major turndown for potential new investors in cryptocurrency is the volatility and the corresponding risk. There is no way where volatility can be fully erased and removed. The best way to combat this is to do extensive research whenever an investor is deciding on their first cryptocurrency investment or their next opportunity. The research can be following major crypto people in the world, reading up on any news relating to cryptocurrencies, going to different cryptocurrency conventions like the recent Binance blockchain week in Dubai, looking at graphs detailing the price changes and fluctuations, and asking any people you know personally who are involved in the cryptocurrency market. This will take out most of the potential volatility. The risk associated with the volatility will slightly decrease but with anything in life you cannot remove risk. As the great Facebook founder and current CEO, Mark Zuckerberg once said “The Biggest Risk is not taking any risk. In a world that is changing quickly, the only strategy that is guaranteed to fail is not taking risks.” Just look at pioneers who are successful in life; a perfect example is Bitcoin in this situation. Yes, they had a bit of luck but when other people did not believe that this could work, they did, took the risk, and now are reaping the rewards on yachts in Monaco and eating caviar for dinner. Additionally, they did all this when people were throwing out their idea like it is garbage. I am not guaranteeing that this will be everyone’s story but one of you could be the next Davinci Jeremie and people will look at you in a few years’ time and say I wish I had entered the cryptocurrency market in 2022.