Investing and trading are the most common ways people use Bitcoin. To some people, these words could be new. Others think they mean the same. However, investing and trading are essential pillars of Bitcoin. They are also not the same.
Naturally, humans go for the most valuable things. From the moment a person learns to talk, walk, and interact, they haggle, exchange, and make deals that bring them the most value. Before humans invented physical money, people used a barter system to get what they needed or wanted by swapping what they had with what they didn’t have. Every item that humans used in a barter system had value.
What’s more, the value keeps changing depending on the object and how other people needed it, as well as its scarcity. Additionally, a person was better off with the items they got through barter trade than initially. And similar rules apply today when purchasing and selling items.
Investment and trading depend on humanity’s knack for getting what has value and considering its future value. In Bitcoin’s case, trading and investment have similar goals. People want to purchase and sell Bitcoin for a higher price than they use to acquire it. However, people use different strategies to trade and invest in Bitcoin.
Investment doesn’t provide a get-rich-quick option. An investment offers a way to accumulate wealth. When you invest in Bitcoin, you don’t focus on short-term profits. Instead, you purchase this virtual currency, hoping its value will increase over time. Once you opt to invest in Bitcoin, you don’t intend to spend or use your tokens soon.
An investor hopes to gradually grow a portfolio and make profits from holding onto this digital asset for some time. Crypto investors call this approach Hodling. Bitcoin investing is somehow unusual because an investor doesn’t pay greater attention to current affairs or news about the crypto market every day. Instead, they hold onto their Bitcoin through multiple price cycles. Thus, a Bitcoin investor won’t sell their digital asset when the price drops.
Most investors think that most assets’ prices increase over time. A Bitcoin investor can hold onto their digital currency for several reasons. For instance, an investment gets an early mover the biggest reward. Therefore, purchasing an asset before other people enables an investor to pay a lower price and make more profits upon selling it later. Another reason is that Bitcoin’s value will eventually increase as mainstream finance adopts it and prominent companies accept it as a payment method.
Bitcoin trading provides a way to accumulate wealth fast, provided you use an effective strategy. Trading is often a high-octane and fast-paced method of making money. A person trades Bitcoin on a medium or short-term basis. A Bitcoin trader follows events, news, and market activity throughout the day to monitor indications that hint at a potential change in Bitcoin price. The Bitcoin market is volatile. Therefore, a trader faces more risk than an investor.
When trading Bitcoin, you aim to purchase the virtual currency at a low price and then sell it when it increases its value. In most cases, this trading involves medium-sized trades. However, people can also engage in more significant transactions. Nevertheless, this trading comes with volatility and a dynamic force while settling into the worldwide market. But the volatility that surrounds Bitcoin trading provides a possibility for benefiting from high yields.
The Bottom Line
Both Bitcoin trading and Bitcoin investing was initially exclusive to the financial elites. However, things have changed, and almost anybody can trade or invest in Bitcoin. What a person needs to trade Bitcoin is a crypto exchange like Oil Profit, read our review about oil profit and a digital wallet. That way, a person can buy and sell or invest in Bitcoin using their smartphone anytime, anywhere.