Bitcoin currency was the first cryptocurrency released in 2009 by Satoshi Nakamoto. Its success blossomed in the span of two years after launching it in white paper. Bitcoin offers transaction fees at a lower rate compared to traditional methods of transactions.
Traders are not required to have cash to complete transaction in Bitcoin; instead, it is manipulated and verified by massive computer algorithm. Although it is not considered legal, Bitcoin still managed to be on top and exceeds the 7 billion US dollar market cap despite frequent changes in exchange rate.
Bitcoin exchange is a digital platform where businessmen trade and disseminate fair price for commodities, derivatives, or other financial instruments. There are two parties involved to complete a transaction – the makers and the takers.
A trader limits order and influences price list and then sets it on the order book in the digital platform. If the opposite end of the transaction corresponds to the order, the trader who limits the order is termed as the maker, while the trader who accepts the order is called takers.
The Way It Works
Bitcoin currency has value because it is both rare and useful; thus, exchange rate is dictated by the supply and demand in the market just like how the value of gold is determined. For example, as the demand increases, the Bitcoin exchange rate increases as well.
Before a trader can transact in Bitcoin exchange, he or she should run through a verification process to certify his or her identity. An account is open for the trader to put their money to purchase Bitcoin. It can be done via bank transfer, PayPal, credit card, debit card, gift card, or money orders.
To further understand how it works, for example, two traders place an order of BTC/USD 3885.75 and BTC/USD 3885.55. The taker’s order will be filled with Bitcoin at the best price. In case the taker needs ten but the best price has only five, the remaining five will be filled with the second best price.
Every businessman must remember to run a comprehensive study on the complexities of the new development in currency. Popularity, that of Bitcoin currency for example, should not be a basis for a successful business; instead, it should be its stability.