How and Where to buy Bitcoin without paying fees
Bitcoin has captured the imagination of millions of investors after its value soared over the past decade. Multinational companies, institutional investors and major banks have now joined crypto enthusiasts in jumping aboard the Bitcoin bandwagon.
The best way to capitalize upon the crypto revolution is to buy and sell Bitcoin CFDs. This allows you to benefit from the fluctuations in Bitcoin’s value, without having to go through the rigmarole of buying Bitcoin and holding it. This guide teaches you how to trade Bitcoin CFDs and explains why it has become such a popular pursuit.
What is Bitcoin?
Bitcoin is a decentralized cryptocurrency designed to enable peer-to-peer transactions among users spread across the world. It was released in January 2009 by the pseudonymous Satoshi Nakamoto, making it the original cryptocurrency.
All transactions are stored on a public ledger called a blockchain. Each transaction must be verified by network nodes in a process known as proof-of-work. This requires miners to solve complex cryptographic equations. As a reward for their efforts, miners are given small amounts of Bitcoin for each completed block.
The difficulty of mining continues to increase, and it is dominated by companies with huge mining factories. The reward for mining also halves roughly every four years.
Bitcoin can be used to pay friends and family, and it can also be spent at a huge range of retailers around the world. You can use Bitcoin to buy trips abroad, hotel stays, property, cards, food, drinks, clothing and much more.
It was initially designed as a payment method, but many people now view Bitcoin more as a store of value, similar to gold or fine art. The price of a single Bitcoin has soared from a fraction of a dollar in 2009 to more than $60,000 in 2021.
Bitcoin’s key features
The price rises were initially driven by retail investors and high-net-worth individuals known as whales. However, it is increasingly being snapped up by corporations, fund providers, banks and institutional investors, with Tesla, MicroStrategy, Square, GrayScale and Ruffer Investment Company all buying Bitcoin. If you are wondering how to buy cryptocurrency, Bitcoin will generally be the first coin you are interested in.
One of the most appealing features of Bitcoin is the finite supply. It is capped at 21 million BTC and the circulating supply went past 18 million in 2021. The 21 million limit will be reached by around the year 2140, at which point record-keeping will then be rewarded solely by transaction fees. Many Bitcoins have been irretrievably lost over the years, so the actual supply will be a lot lower than 21 million, and this scarcity makes it a coveted asset.
The current block reward for mining is 6.25 BTC, and a block time is roughly 10 minutes. The hash function is SHA-256. There is a Bitcoin development team that fine-tunes the offering, but the blockchain is kept consistent, complete and unalterable by mining.
Risks of buying Bitcoin
Many people like to buy Bitcoin and hold it, but this process is fraught with risks. It is possible to buy Bitcoin and then accidentally transfer it to the wrong wallet. It is irreversible, meaning your funds are lost forever if you make a mistake. You can also store your Bitcoin on a hardware wallet and lose it. If you also lose your backup phrase, your Bitcoin can disappear forever. This has happened to many people.
There are also a great deal of security risks when it comes to holding Bitcoin. Hackers are continually trying to steal your BTC. Phishing scams abound. Many Bitcoin exchanges and wallets have suffered high-profile security breaches, and users have lost millions.
It is also expensive. You have to pay a fee to buy Bitcoin, a fee to transfer it to your wallet, another fee to transfer it back to an exchange and a fee to sell it. It can be difficult to withdraw fiat currency from a crypto exchange to a bank account too, as many banks do not accept payments from exchanges. You may need to invest in an expensive hardware wallet and endure the hassle of setting it up, as software wallets are insecure.
Buying, holding and selling Bitcoin is also time-consuming. You have to spend time learning how to buy Bitcoin, asking people where to buy Bitcoin without being charged astronomical fees, and working out how to set up and maintain a crypto wallet. Exchanges have often been known to crash during high volume periods. All in all, buying and holding Bitcoin can be a real headache.
For all of these reasons, you might prefer to trade Bitcoin without having to actually buy and hold any coins. That is where Bitcoin CFDs come in.
What are Bitcoin CFDs?
A CFD is a contract for difference. It is essentially an agreement between a buyer and a seller, stipulating that the buyer must pay the seller the difference between the value of Bitcoin at the start of the contract and its value when the contract expires. It solely focuses on the price change between the price entry and exit, making it a very clean, simple and convenient way to trade Bitcoin.
A CFD does not require you to buy any actual Bitcoin or hold it. You simply seek to earn revenue based on its price change over a certain period of time. You either go long or short on Bitcoin. If you think it will increase in value, buy Bitcoin (go long). If you think it will decrease in value, sell Bitcoin (go short).
The more the price moves in your favour, the more you earn. However, the price can move against you, resulting in a loss, so it is important to conduct thorough research and make educated trading decisions.
nextmarkets is the best option for anyone that wants to buy Bitcoin CFDs and sell Bitcoin CFDs. We offer commission-free trading on a high-quality, user-friendly platform, with tight spreads. Our customer service representatives can help you with any part of the Bitcoin trading process, and it is easy to make deposits and withdrawals.
If you want to buy Bitcoin online, this is the best place to buy Bitcoin, as you can enjoy all the benefits without facing any of the security risks, commission fees or transfer fees.
Why are Bitcoin CFDs popular?
A Bitcoin CFD gives you a chance of profiting from the crypto revolution without having to actually hold BTC. You can buy and sell CFDs covering a wide range of instruments, but Bitcoin is especially attractive to traders due to its volatility.
The value of Bitcoin can fluctuate significantly on a daily basis, and this volatility provides traders with a wealth of opportunities. The sharp price moves allow traders to identify ideal entry and exit points for trades on a short-term basis. Essentially, volatility creates risk, and you can only earn rewards by taking on risk. Bitcoin traders therefore embrace volatility and seek to profit from it.
However, with a higher chance of volatility, also comes more exposure to risk. Thus, the downside can be just as great as the presumed upside. It’s always important to understand both extremes so as to minimise risk while still taking advantage of sharp price movements.
How are Bitcoin CFDs traded?
The first step is to set up an account with nextmarkets. We have taken every possible step to ensure that the process is as quick, convenient and painless as possible, while still incorporating extremely robust security measures.
You should be able to open your account in less than five minutes. Simply enter your email address, choose a password and click to register your account. You can then enter your phone number and verify it by entering a code sent to you via SMS.
You can then start to buy Bitcoin and sell Bitcoin through CFDs. You will be required to complete a KYC process in order to enjoy the highest limits; this requires you to provide proof of ID. You can fund your account using a debit card, PayPal or an e-wallet, and then head over to the “Markets” section of the site.
You will find Bitcoin listed as a tradable option in the cryptocurrency section. Click on it, and you will see a candle chart illustrating the recent performance of Bitcoin. You then have two options – “Go Short” or “Go Long”. If you think Bitcoin will increase in value, buy Bitcoin by going long, and go short if you think it will decrease in value.
When you have made your decision, a “Market Order” window will appear on the screen. You will see the sell price and the buy price. The difference between the two is known as the spread, and nextmarkets offers some of the tightest spreads on the market. Enter the amount you wish to trade, check you are happy with the margin and confirm that you would like to open the position.
Your trade will then go live. You can monitor its progress and decide when you want to exit the trade. Many people like to have multiple trades open at the same time, which can provide opportunities for hedging. Now you have a better understanding of how to buy cryptocurrency.
Benefits of trading Bitcoin
You can benefit from various features when buying and selling CFDs. These are some of the key tools available:
Leverage
Leverage trading allows you to borrow funds in order to increase your trading position beyond your cash balance. You essentially lay down a fraction of the full value of your trade, and we loan you the rest. The capital you pay up front is known as the margin, so leverage trading is also widely referred to as margin trading. Leverage can increase your financial capabilities as a trader, and it has the potential to lead to larger profits. However, it can also lead to larger losses, so you need to be careful.
Stop-loss orders
This order instructs us to either buy or sell your Bitcoin CFD when it reaches a certain price. It is designed to limit your loss on a position. When used appropriately in Bitcoin trading, a stop-loss order can be an extremely valuable tool. It costs nothing to implement, it offers you an insurance policy and it can take some of the emotion out of trading.
Take profit orders
This provides you with an opportunity to lock in a profit when the price of Bitcoin reaches a certain level. You can instruct us to either buy or sell if it reaches a certain number, thus closing the trade. This protects you from the price suddenly swinging against you and wiping out your losses. However, it can reduce your potential profits, so you should work out if this sort of trailing stops order suits you.
Anticipate Bitcoin’s price movements
Bitcoin traders generally use two broad methods in an attempt to predict whether Bitcoin will increase or decrease in value: fundamental analysis and technical analysis. Fundamental analysis focuses more on the big picture, whereas technical analysis is more concerned with statistics, patterns and historical trends.
When conducting fundamental analysis on Bitcoin, you can examine areas like on-chain metrics, transaction count, transaction value, active addresses, fees paid, hash rate, project metrics, development team, competitors, market cap, supply mechanisms and so on. Yet people trading Bitcoin CFDs might be inclined to focus more intently on any news or events that could push the price up or down in the short-term.
The price of Bitcoin has been known to spike after prominent billionaires Tweet about it, for example, or when major Bitcoin conferences are held. It has historically declined after a government figure in the United States or another major economy has talked of a regulatory clampdown on Bitcoin. These are the sort of things Bitcoin traders look out for, along with whale transaction activity, unconfirmed transactions, miner issues, the proximity to a halving and the USDT premium.
Technical analysis focuses on historical price charts and seeks to uncover patterns that can provide insight into Bitcoin’s future behaviour. It has proved to be a reasonably cyclical instrument over the years, and analysts seek to identify trends. They delve into moving averages, trading volume and support and resistance when conducting technical analysis. Many traders like to combine fundamental and technical analysis before opening positions.
Alternative crypto CFDs
Now that you know what is cryptocurrency, you might decide to move onto trading an altcoin such as Ethereum. You can buy Ethereum CFDs and sell Ethereum CFDs at our trading platform. We also provide you with the opportunity to trade more than 8,000 different stocks and 1,000 ETFs commission-free on our exchange. You will not have to pay custody fees, order fees or third-party fees, and our real-time trading coaches can help you get started.
Conclusion
Bitcoin CFDs have proved popular because they give traders exposure to the world’s largest cryptocurrency, while removing the security risks and high fees that come hand-in-hand with buying and holding Bitcoin. Our platform allows you to buy and sell CFDs with ease, and you can take advantage of valuable features like stop-loss orders and take profit orders. We offer low spreads and professional customer support, so open an account today and start to trade Bitcoin.
