How to Trade Digital Currency

Different Types of Bitcoin Trading
Coin Cloud Team
, published on 
April 16, 2021
How to Trade Digital Currency

Trading digital currency isn’t nearly as complicated as you might think. In fact, there’s an entire community of people dedicated to making your trading experience easier.

Back in the “olden days” of digital currency (which wasn’t that long ago), trading funds was considered a much more difficult process than it is today.

What is Bitcoin Trading?

There are a few ways we can define what it means to “trade” digital currency, and people use them all.

Here are the two main definitions:

1. To buy or sell digital currency with USD or another fiat currency

2. To profit by strategically buying low and selling high

The original (and looser) definition came first, so we’ll start there …

Peer-to-Peer Trading

Peer-to-Peer (P2P) trading is the original way that digital currency like Bitcoin was exchanged. You can still use this method today, although it isn’t as popular and requires some strategy (and trust).

Because there weren’t any companies or platforms to make trading easier yet, your only option in Bitcoin’s early days was to swap your currency with someone else directly. You did this by negotiating a price and exchanging wallet addresses with them.

Since it was difficult to complete this process online, people would meet up with traders they found online at places like coffee shops to exchange their digital funds. But even this can be a little scary. I mean, meeting a stranger you talked to once on the internet is usually strongly discouraged. For that reason, P2P trading is most efficiently (and safely) practiced between friends or family rather than with strangers from forums.

That being said, there’s nothing wrong with giving your cousin some Bitcoin as a graduation gift or selling some to a friend who’s just getting into digital currency. To do this, you’ll first and foremost need a digital wallet. These usually come in the form of mobile applications and ideally provide you a safe, easy, and efficient way to send or receive virtual currency. Luckily for you, Coin Cloud has a crypto wallet app that hits all of the marks. And don’t worry, if you need help setting it up, here’s a step-by-step tutorial.

Third Party Exchanges: Online

Exchanging directly with another virtual currency holder isn’t the only way to trade your Bitcoin for something else. You can also use third-party services such as online exchanges.

Online crypto exchanges are internet platforms or websites that work as a neutral middleman to provide you the digital currency you want, or let you sell it. To use these platforms, all you really have to do is sign up and submit your credentials, then log into your account from your computer.

The main drawback to these sites is that, unlike peer-to-peer trading, you cannot trade something like cash for your digital currency. That leaves people without a credit card or bank account at a loss. These sites also require significant personal information from you that has to be validated before you can start trading.

Third Party Exchanges: Offline

Another third-party exchange service that does allow you to trade cash for digital funds is the Digital Currency Machine (DCM). These physical machines resembling ATMs enable you to buy or sell digital currency with cash. So it’s sort of like an offline exchange.

You can put cash into a Coin Cloud DCM to get digital currency in your wallet. Or, you could get cash from the machine by trading in your virtual currency. DCMs are located all across America in 47 states, and are also available in Brazil. You can find locations near you in the Coin Cloud Wallet app, and if you’ve never used a Coin cloud Machine, here’s how it works.

Stock Trading Exchanges

This is where the second definition comes in. If you’re using “trading” to denote strategic buys and sells designed solely for profit, like stock trading, you’ll want to use a stock trading platform that’s bitcoin-friendly rather than a dedicated bitcoin exchange.

The reason for this is that trades don’t happen quickly enough on a digital currency exchange for most fintech-oriented crypto traders. You want a service that can quickly sell off at the top or purchase at the bottom of the curve, and you need to be able to set notifications and automate transactions to make it happen with or without you.

While we are not experts in this type of bitcoin trading, there are some popular sites like TradeStation, Interactive Trading and Robinhood, as well as more traditional brokerage services like TD Ameritrade and Charles Schwab, which you could use for further research.

Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.

What is Coin Cloud?

Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.

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