Crypto currency price has rose sharply in past 2 years. The total market value of all cryptocurrencies stands at $2.48 trillion, up from less than $1 trillion at the beginning of the year.

The two popular ways to take advantage of the crypto-currency market is to

• Buy coins through an exchange
• Trade cryptos via a CFD broker. Each way has its own advantages and disadvantages.

In this article we will discuss on advantages and disadvantages of both of these methods which will help you make decision on which method is the best for you. Before you make any decision, you should first think about that and develop your investment strategy. Owning cryptos (long term horizons) or trading them (short-term horizons)has different level of protection, fee scheme, payment methods, withdrawal methods, etc.

What is Investing in or Owning Crypto currency and why it is needed?

Owning cryptocurrencies is a great idea if you prefer to shop or to transfer money with them anywhere at any time quickly (faster than with normal bank transfers), at a lower cost and by taking advantage of a higher degree of anonymity than with traditional wire transfers.

To invest and own crypto-currencies, you first need to find an exchange first that you can trust. Then you can buy the crypto currency from the exchange with the fiat currency.

After purchasing your virtual currencies, you need to put them into a “wallet”, a program that is used to contain them. Most of the exchanges have its own “wallet” that clients can make use of it, but it is widely recommended that you use a wallet that only you have access to and fully control.

There are different types of wallets, they can be categorized into two main groups: “cold” and “hot” wallets. The main difference is whether or not they are connected to the Internet. While “hot” wallets are connected to the net, “cold” wallets are not.

What is crypto currency trading and why it is needed?

Cryptocurrency trading is the act of speculating on cryptocurrency price movements via a CFD trading account i.e buying and selling the underlying coins.

Trading crypro currency enables you to speculate on cryptocurrency price movements without taking ownership of the underlying coins. You can go long (‘buy’) if you think a cryptocurrency will rise in value, or short (‘sell’) if you think it will fall. Hence you can both buy and sell crypto currencies depending on the market trend.

Both are leveraged products, meaning you only need to put up a small deposit – known as margin – to gain full exposure to the underlying market. 

Main differences between Investing Vs trading in Cryptocurrency

1. Buy Vs Speculate

Investing in Crypto currency means to just buy and get the ownership to the crypto right away whereas Trading Crypto currency means to speculate the price movement of the crypto currency.

2. Long Vs Long and Short

By Investing in crypto , you can only buy i.e only long positions can be taken meanwhile in Trading crypto, you can both buy and sell crypto i.e you can take both long and short positions.

3. Hold Vs Price Swing

The strategy to earn in crypto investment is to hold the crypto till the price grows higher reaches your expectation and close the long position whereas In trading crypto, you can earn by the volatility of the crypto in either direction.

4. Full payment Vs leverage advantage

Full value of bitcoin purchase is required upfront for the buying of cryptocurrency while trying to own crypto whereas While trading crypto, you can utilize margin and leverage to make maximum use of account equity.

5. Hacking risk Vs Trusted broker

Holding the digital currency, cryptocurrencies are vulnerable to cyber-thieves. Hackers usually target crypto exchanges to drain their crypto wallets this is the reason why you shouldn’t keep your cryptos online in an exchange. In addition, as the crypto-sphere is quite new, it isn’t a regulated industry.

For this reason, using derivative financial products like CFDs (Contract For Difference) through a trusted broker can be an interesting option for you to make a profit from the crypto-market.

Is It Better to Invest or Trade Bitcoin?

There is no one word answer to this question. The choice should depend on the knowledge of Bitcoin and the available assets.

Are you confused about whether you should own or trade cryptocurrencies? Think first about your financial needs, goals, and horizons.

Along with being able to transfer money and use cryptocurrencies to shop whenever you want, owning virtual currencies can also be compared to longer-term investments. Making Investment in Bitcoin can start from a minuscule amount which can keep on increasing with time and experience.  Having coins in your wallet means that you can hold your virtual currencies until you want to sell them at a higher price later on in the future. In the meantime, you won’t pay fees for holding them. It’s also a long-term undertaking, which eventually might lead to accumulating a large amount of money. It can also ease the nerve-wracking volatility of Bitcoin as one would enter the market prepared for a wait.

Trading crypto-currencies via leveraged products like CFDs means that you do not own any coins, you are only taking advantage of the crypto market volatility instead. Trading crypto currencies is meant for those who know the Bitcoin nature in depth and aren’t afraid of losing. Trading crypto-currencies is a short-term investment strategy, where you are using price changes to make a quick profit without holding the underlying asset. The constant fluctuation of Crypto currency can be an exhilarating experience for any trader, but at the same time, it can scare away those who do not know how to deal with it.

The difference between investing and trading Crypto currency depend not only in the technicalities of it but also in one’s character and nature. Ask yourself: would you consider yourself as an investor or a speculator?

While both seek maximum profit, an investor doesn’t have the same trading strategy, level of risk aversion and objectives as a speculator. In any case, the key to successful investing of any kind is to use the right platform for your needs.

Also to be noted is that Exchanges tend to be riskier than CFD brokers, who are offer protections to retail traders. Brokers can be useful for you to be able to apply your short-term trading strategy and appropriate money management rules in a responsive trading environment, while strengthening your financial knowledge.

Some see trading Crypto currency as a Riskier yet wonderful opportunity, without any regulations and legitimate backup, while others are just waiting for the governance to kick in. It’s a game of which nobody can predict the end result.

Final words :

We hope that this article might have added some insights on comparison between Investing and trading crytocurrencies. To brief on choosing the investment and trading crypto currencies , You can choose crypto currency investment if you wish to shop with that or want to follow the long term hodl strategy and can opt for crypto trading if you prefer short term speculative strategy along with avoiding the risks associated with crypto owing. If you choose the later, Winstone Prime is the best platform to trade crypto currencies. Open account now and start trading crypto currencies.

Happy trading !!!