Bitcoin breached the $50,000 mark on Monday. This marked the first time it exceeded that point in three months. The boost came in light of investors piling onto the crypto coin in a bargain-buying spree. At its peak, the popular cryptocurrency hit a high of $50,152.24, which was up 2.5 per cent since mid-May. Speaking on the recent gains that Bitcoin saw this week, Edul Patel, CEO and Co-founder of Mudrex said, “If there is an increase in trading volumes and bulls manage to gain momentum, we might see a dash towards $61,000 this week. We are only at the beginning of the week, and things are already looking exciting for the week ahead.”
Cryptocurrency is the new rage for many reasons. It is untraceable, it is secure and it is a good way to make a great deal of money via investments. However, digital currency does come with its own set of drawbacks such as high market volatility, unpredictability and lack of regulation which does not do much to inspire confidence in first-time investors. So, before you dive into the crypto pool, there are a few things you should know.
Trading on Crypto Exchanges: What You Need to Know
Much like buying and selling shared on the stock exchanges, cryptocurrency trading is done primarily through crypto exchanges. These exchanges aid you as the investor to trade cryptocurrencies based on their current market value. This value is determined by demand, supply and the overall condition of the market. There are several layers of fees that you need to be aware of before attempting this.
Exchange Fees
The first level is the exchange fees. This is the amount charged by the exchange to complete a buy or sell order. Most of the exchanges in India have a fixed fee model but the end cost depends on the platform that you opt for. This fee is the primary mode of revenue for these exchanges so keep that in mind when choosing. The fee that these exchanges charge is generally between 0.1 per cent to 1 per cent or more for each trade. This means if you invest around $1,000 in the trade, the commission to the exchange would be around $100 or so.
Network Fees
The essential premise of cryptocurrencies is that they need to be mined using a lot of computer hardware. This network fee goes to the miners who dedicate their time and effort to doing so. It also helps you verify and validate each and every transaction to make sure your crypto coins have not been used before. This fee, however, is not controlled by the exchange and is set in place by the miners and is based entirely on demand. The more traffic on the network, i.e., the higher the demand, the more the fees may increase.
Wallet Fees
A crypto wallet is like an online bank account for your digital coins. It helps keep your cryptocurrency safe. Additionally, it also allows the holder to send and receive coins. Think of it like a Paytm wallet. Most of these wallets do not charge you any fees, but if you opt for a crypto wallet that comes in-built with most exchanges, then you could face an additional wallet handling charge. One would use the wallet to store the cryptocurrency amidst trading. The fees come into play whenever you send crypto coins to someone else. It basically comes in as a form of network fees.
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