Why There Was a Need to Introduce CFD Trading Feature into Cryptocurrency Trading
If you are new to the cryptocurrency world and are keen to know more about this remarkable platform and how it has helped change the course of the history with its unique, reliable and self-developing technology, then you have come to the right place.
There are a lot of people who want to make it big by putting in very less efforts but in reality, things are not as they seem. When people start reading about cryptocurrencies, instead of knowing the history and its basics, they tend to skip to the parts where they can see how the money is made.
It is a possibility that you may have done the same and are now reading about the CFD trading instrument in the crypto-trading platform. I know it is impossible for me to not discuss CFD trading with you but before I get to the point, I want to tell you a bit amount the traditional cryptocurrency trading and then take you through a journey to show you why there was a need for CFD trading in the first place.
How Cryptocurrency Started and What Was its Initial Role
Cryptocurrency trading is considered to be the most recent induction into the online trading platform where the old online trading members are forex trading, commodity trading, stocks trading & indices trading etc.
Although these platforms proved out to be very profitable for the users but there was one thing that was in common in both all the trades, which was that these were centralized trading platforms and there was always involvement from third-party sources or from governments. Another pain point was that there were many people skeptical about sharing their personal information but still, they had to do it in order to be able to take part in the trading activities.
When Satoshi Nakamoto introduced the first-ever cryptocurrency, Bitcoin (BTC), it created a ripple among the entire online trading community. It spread across the internet platform and made its way to the world economy. Cryptocurrencies provided users the ability to mine crypto-coins, make transactions and buy/sell products without sharing any personal information, which was through the decentralized platform.
This system worked on a peer-to-peer networking system between users known nodes that flowed through the framework called blockchain. For the first time, people knew that they could perform transactions without sharing their personal information to any third party of government sectors and they will be required to pay really low fees per transaction.
Why Cryptocurrency Trading was Not Meant for Every User
Soon, the cryptocurrency platform was adopted by the online trading brokerages as a new trading instrument and there were even brokerages launched that only dealt in crypto-trading. However, there was one disadvantage in this service for people who could not afford to buy crypto-coins due to lack of funds. This is when the need of a new feature in the crypto-trading platform was felt.
CFD Trading Was Chosen as the New Crypto-trading Feature
In times like these, the crypto-blockchain developers decided to introduce CFD trading feature in the cryptocurrency trading platform. The full form of CFD is ‘Contracts-For-Difference’ and as the name suggests, this feature was based on a contract between two parties where one party is the customer and the other is the broker or the brokerage making the deal.
In cryptocurrency CFD trading, both parties come long, choose a particular cryptocurrency, and predict whether the price of the crypto is to go up or go down at a pre-decided date & time. If the deal goes in the favor or the user, it’s the user who makes the profit based on the difference in the value of the asset versus the quantity he pre-decided, and if the deal goes in the broker’s favor, then the customer needs to pay the difference amount versus the quantity of the asset.
This contract does not take place in the real-time crypto-trading market but the replicated emulation of the real-time cryptocurrency trading so the person making the call does not take the pressure of paying a really high price if the deal goes south for him or her.
This feature is another milestone for the cryptocurrency trading world as it has targeted a whole new market of investors who cannot afford to buy cryptocurrencies in order to do trades.
Now that you know where the CFD trading made its debut from and the service it offers, you can decide whether you would want to crypto-trading of CFD trading.