Published 2 years ago • 3 minute read

Problems with Bitcoin Trading and How to Avoid Them

The First Thunder

Satoshi Nakamoto added many features when creating bitcoin. Since it became popular, it has undergone rapid growth to become a significant currency. Replacing fiat is only a matter of time. The use and storage of Bitcoin has even switched from online to offline. Businesses have been accepting bitcoin in addition to traditional fiat since 2010. Bitcoin trading has been the subject of scandals in recent years. Moreover, it has struggled with public trust. This is in the middle of trade volume and price manipulation, which is a major concern for traders. The bitcoin price, which is down 55% from an all-time high of near USD 20,000, is surrounded by accusations of manipulation.

The internet traffic of the top 100 crypto exchange websites has been analyzed in a study. The study revealed that 75% of the reported trading volumes on exchanges were shady. In addition, almost 90% of the exchange volumes could be forged. The real trading volume of the largest 100 exchanges was $2.1 billion per day. It was reported as $15.9 billion.

Without regulation, digital assets trading is subject to manipulation. Fake boosting of volumes paints more demand for bitcoin or other crypto assets than there really is. This makes it difficult for legitimate traders to gauge interest.

The Silver Bullets

Bitcoin trading is profitable for many reasons. Nevertheless, it has attracted critics. The Royal Bank of Scotland criticized exchanges for not seeking digital traders before setting price limits and margin trading levels. It predicts that this will muddle the future of digital asset trading.

Bitcoin started as an attempt to create a digital version of the gold standard, with a strictly fixed supply. However, volatile spikes and crashes have plagued crypto trading. Amidst the wild price swings, prominent exchanges stopped trading when the price shot up and crashed within 20 minutes. This could cut into a trader’s profits if an exchange shuts down often.

Furthermore, hacks have ravaged crypto trading since 2010. These hacks have caused major public relations issues for crypto trading. Although the ability to deal with crypto asset security has improved over the years, the threat is always looming.

USD 40 million worth of bitcoin was stolen from Binance not too long ago. This led to the suspension of withdrawals and deposits on the platform. Similarly, Mt. Gox collapsed in 2014 after losing USD 460 million. USD 72 million worth of bitcoin from exchange Bitfinex. USD 500 million in digital tokens was stolen from exchange Coincheck. According to the Wall Street Journal, over USD 1.7 billion worth has been stolen from different exchanges over the years.

How to Stay Safe

When you invest and trade, you want to ensure that your exchange takes security seriously. One of the main features of Bitcoin is that it is programmable. Developers now build exchanges so that you do not have to turn over control until the exact moment before a trade.

To stay safe, it is often advised to store your digital assets offline. Several traders who kept their funds on exchange wallets in the past have been victims of thefts. For large amounts, hardware wallets such as Ledger and Trezor are great storage options. You do not want to join the list of hack victims. In addition, utilize security features such as 2FA and OTP to secure your exchange accounts. This is important. Furthermore, do not be swayed by ridiculous trading volumes, do your research.

Beyond security concerns, crypto is subject to wild price swings. You can insulate your investment using certain bitcoin trading tools.



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