The act of Cryptocurrency Futures Trading entails either speculating on price movements via a CFD trading account, or buying and selling the underlying coins via an exchange. In this article, we provide information about how cryptocurrency trading works and how you can get started.

What is cryptocurrency trading?

In cryptocurrency trading, traders speculate on the movements of cryptocurrencies via a CFD trading account or buy and sell underlying coins on exchanges.

CFD trading on cryptocurrencies

In CFDs trading, you are able to speculate on cryptocurrency price movements without owning the underlying coins. You can go long (‘buy’) if you believe the price of a cryptocurrency will rise, or short (‘sell’) if you believe it will fall.

In both cases, you can gain full exposure to the underlying market with only a small deposit – known as margin – so that you can benefit from both profits and losses.

Exchanges are used for buying and selling cryptocurrencies

A BTC Trading Platform allows you to purchase the coins themselves. To open an account, you’ll need to put up the full value of the asset and store the cryptocurrency tokens in your wallet until you’re ready to sell them.

Many exchanges also limit how much you can deposit, while accounts can be very expensive to maintain. Exchanging brings its own steep learning curve as you’ll need to understand the technology involved.

How do cryptocurrency markets work?

The cryptocurrency market is decentralized, which means it is not regulated by any central authority, such as a government. Instead, it runs over a network of computers. But cryptocurrencies are traded on exchanges and stored in wallets.

In contrast to traditional currencies, cryptocurrencies exist only as digital records of ownership stored on a blockchain. Users transfer cryptocurrency units to other users’ digital wallets when they want to send them. Bitcoin is not considered final until it has been verified and added to the blockchain. It is also the method by which new cryptocurrency tokens are created.

What is blockchain?

Blockchains record data in a shared digital register. Blockchain records transactions in ‘blocks’, which shows how ownership of each unit of a cryptocurrency has changed over time. New blocks are added to the front of the chain as transactions are recorded.

Unlike normal computer files, blockchain technology has unique security features.

Network consensus

Instead of being stored in one location, blockchain files are always stored on multiple computers across a network, and are usually readable by everyone in the network. There is no weak point to hack, or human or software error, and it makes it both transparent and very hard to alter.


Data is linked together by cryptography, a complex combination of mathematics and computer science. Any attempt to alter data disrupts the cryptographic links between blocks, which can be quickly identified as fraudulent by computers in the network.

What is cryptocurrency mining?

A cryptocurrency miner is a person who checks the recent cryptocurrency transactions and adds new blocks to a blockchain as a result of mining.

Checking transactions

It is the responsibility of mining computers to select pending transactions from a pool and check to verify that the sender has sufficient funds to complete their transaction. In order to verify that the sender authorized the transfer of funds using their private key, a second check must be conducted by checking the transaction details against the transaction history stored in the blockchain.

Creating a new block

In a mining computer, valid transactions are compiled into a new block and a complex algorithm is used to generate the cryptographic link to the previous block. Computers add blocks to their blockchain files when they are able to create links and distribute the updates across the network when they are able to do so.