There are primarily two ways you can make money from Bitcoin. On the one hand, you can decide to invest in Bitcoin, which is also known as HODLing. This is the process where you buy Bitcoin and hold it hoping that the price will rise. On the other hand, you can trade the cryptocurrency. This is a process where you buy and sell Bitcoin with the aim of making short-term profits. In this article, we will look at the best brokers you can use to trade bitcoin during the coronavirus lockdown.
Bitcoin Investing vs Trading
A common question is on whether to invest in Bitcoin or trade it. In reality, there are benefits and disadvantages of trading and investing in Bitcoin.
The first advantage of trading Bitcoin is that it allows you to profit when the price of BTC is rising and falling. When its rising, you buy the currency and short it when it is falling. In other words, it is the best way to benefit from the well-known Bitcoin volatility.
Second, trading removes overnight risks. These are risks that happen when you are asleep. If you are a Bitcoin day trader, you can remove these risks by leaving no trades on when you go to bed. As an investor, you risk losing money if the price of Bitcoin drops.
Third, trading bitcoin removes the future risk. While we remain optimistic about Bitcoin, we also believe that the currency is relatively new in the market. As such, we don’t know whether it will soar or decline in future. Therefore, by trading, you remove these future risks.
Fourth, with trading, it is possible to use leverage and maximize your profits. This is relatively difficult to achieve if you decide to invest in the cryptocurrency.
Therefore, we recommend that you invest part of your money in bitcoin and then trade another part of the funds. By investing, you will take advantage of the long-term bullish trend in BTC movement. By trading, you will take advantage of the short-term volatility in the bitcoin market.
Trading in Bitcoin is relatively risky and most people lose money. We therefore recommend that you risk a small amount of your money when you start to trade. We also recommend that you use the tools provided by your broker like stop loss to protect yourself from big losses. Most importantly, use a small amount of leverage to prevent losing more money than you invested.*
Best Brokers to Trade Bitcoin
Capital.com is one of the latest brokers in the world. Established in 2017, the broker has raised more than $25 million from investors. In a white paper published recently, the company said that it had more than 360k accounts from around the world. The company offers tens of cryptocurrency pairs including BTC/USD, ETH/USD, and XRP/USD. There are several reasons why we love Capital:
- Easy to use mobile and web trading platforms.
- A comprehensive education package.
- Regular webinars.
- High leverage.
- Open 24-hours every day.
- Tens of cryptocurrencies offered.
Robinhood is one of the biggest fintech companies in the world. In less than a decade, the company has managed to disrupt the financial industry by offering commission free trades. The company started Bitcoin in 2017 and has become one of the biggest players in the industry. In its recent funding, the company was valued at more than $8 billion. There are several reasons why we love Robinhood:
- Easy to use platform. Robinhood has one of the easiest-to-use platforms in the industry.
- Safe platform. Robinhood has received millions of dollars from investors. This means that they can afford to invest in the highest security features.
- No commission. Robinhood makes money through the spread because it does not charge a commission.
Still, there are several cons for using Robinhood;
- Limited education materials unlike Capital.com
- Robinhood is not available in most countries. In fact, it is not available in all US states.
- Robinhood’s customer care is not the best.
Coinbase is the biggest Bitcoin exchange in the world. In its latest funding round, the company was valued at more than $8 billion. Coinbase is known for its platform that enables people to buy Bitcoin. Still, the company has a product known as Bitcoin Pro, which enables advanced traders to trade in a variety of cryptocurrencies. There are several reasons why we love Coinbase:
- Coinbase is safe. As the biggest cryptocurrency exchange in the world, Coinbase has invested millions of dollars to make its platform safe. For this reason, it has never suffered a security breach.
- Easy to use. Coinbase has one of the easiest-to-use mobile and web platforms in the market.
- Low minimum deposit. You can trade Bitcoin with as little as $200.
- Insured deposits. The company has insured all crypto it holds.
Still, there are several cons we identified when using Coinbase:
- Minimal education materials. Unlike Capital.com, Coinbase does not have a lot of educational materials.
- High fees. The fees to trade using Coinbase are relatively high.
- Countries accepted. Coinbase is not available in many countries.
BitStamp is one of the leading crypto exchanges in the world. In 2018, the company had more than 3 million users from around the world. The company was sold to a group of South Korean investors for more than $400 million in 2018. BitStamp offers hundreds of cryptocurrencies, including Bitcoin and Ethereum. There are several reasons why we recommend the company:
- Easy to use mobile and web platforms.
- A credible and safe trading platform.
- Highly liquid because of the volume it offers.
- Easy to deposit and withdraw.
There are several cons for using BitStamp. These are:
- BitStamp does not have a lot of educational materials.
- As with Coinbase, Bitstamp is a bit expensive to use.
- Bitstamp supports about 80 countries, meaning that the service is not available in many countries.
Finding a good Bitcoin broker is an important thing if you want to make good money in the industry. Ideally, you want a broker that has been in the industry for a while, one that offers a simple-to-use platform, and one that is not very expensive. We have used and tested the brokers we have mentioned here and believe they are the best.