The Evolution of Digital Asset Trading
Introduction
Digital assets are a new class of assets. Maybe “relatively new” will be more appropriate as they have been around for quite a while. Digital assets commonly refers to virtual assets that build on the same basic idea. You can also trade these on a variety of exchanges.
Cryptos are the most common form of digital assets. These have made digital asset trading popular over time.
Cryptos as digital assets facilitate peer-to-peer transactions. A centralized authority does not control it. Digital assets were created via advanced cryptography. The people behind the various cryptos also added many features in crypto that fiat currencies does not have. Satoshi Nakamoto created the first crypto asset (Bitcoin). His identity remains unknown. Nakamoto released his famous white paper in 2008. It discussed the motive behind creating the BTC. Nakamoto identified the root problem with fiat to be the trust required to make it work. You must trust a central bank not to manipulate fiat. History bears witness that central banks can breach this trust.
There is no doubt about it. BTC was created to fill gaps in fiat transactions. These gaps include challenges with third party trust and transaction speed. According to The Economist, Bitcoin has three qualities useful in a currency, as outlined below.
Hard to Earn
First, it is hard to earn. You earn BTC through mining. Mining BTC is not an easy task. Some people argue that BTC-mining collectively consumes 1% of all global power.
The concept of mining may cause your head to swim but here is the basic idea. Supercomputers that solve complex computational math problems perform a lot of BTC mining. Some people compare it with “striking gold in the ground while digging in a sandbox”. Not sure how this expression is relevant at all, but hey.
Limited Supply
Furthermore, there is a limited supply to the BTC. In some ways, you can compare BTC with gold. You must mine gold out of the ground. You must mine BTC through digital means requiring electricity. However, there isn’t an infinite amount of BTC. The creators made sure of that. In fact, only 21 million Bitcoins can ever exist. At the time of writing this article, the number of BTC left to mine is roughly 3 million.
Many Assets & All Are Transparent
Currently, there are several digital assets aside the BTC. We now have various altcoins created to solve different problems ranging from privacy to transaction speed. Transactions with digital assets are easy to verify via a public ledger. The blockchain being an online ledger is available to everyone. The balance and all transactions of any address is public. This level of transparency is missing in fiat. The advent and development of digital assets over time redefined the way we store and exchange value.
How Digital Asset Trading has evolved
Blockchain changed the path of the financial market. It has changed how we use money. In addition, it ushered in a new era of digital assets trading. Initially, stock traders were the only traders of financial assets. The arrival of digital assets changed that.
Finally, as the crypto industry continues to grow, automation has been introduced through Bitcoin Trading software to replace manual trading. These programs use algorithms specially designed for the crypto market to make predictions and maximize profits. Furthermore, it is free of human errors that plague manual trading.
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