When compared to other products that can be traded like bonds, shares, etc., Cryptocurrency is still new in the market. Cryptocurrencies are decentralized currencies like Bitcoin, Ethereum, Litecoin, etc. They are usually stored in a ledger, popularly called a blockchain. Cryptocurrency makes it possible for people to keep their money without using a bank account where outrageous interest is charged on it from time to time.
Is there a need for a broker in Cryptocurrency Trading?
The word cryptobroker, most of the time, refers to an intermediary. A crypto broker takes the place of a middleman between a buyer and a seller of cryptocurrency and could buy up cryptocurrency and sell them directly on their platform. A crypto broker accepts payment from you for cryptocurrency and makes your order available.
Since cryptocurrency is decentralized, you don’t necessarily need a broker to trade it. You can conveniently trade person to person at no charge, with no particular exchange and no intermediary. The good question to ask then is whether you should work with a crypto broker.
Benefits of A Cryptocurrency Broker
A crypto broker gives you several advantages. One of the many advantages is that it is easy to set up. Trading cryptocurrency without a broker makes you experience a lot of technical issues in connection with blockchain. But using an already established system by a broker makes you avoid these issues. Also, with a cryptocurrency broker, you enjoy the advantage of leveraging. This means that you can borrow funds to adjust your trading position.
A crypto broker provides you with advanced technical instruments which could be a downloadable platform, mobile App, website, and so on. It is better than doing solo trading. Trading crypto is faster when you use already established platforms. The price is also fairer with this.
Grey Areas Of A Cryptocurrency Broker
As much as a crypto broker can offer you a level of ease in trading, there are also gray areas to using a crypto broker. One known disadvantage of using a crypto broker is the fee and commission it charges. When you do Solo trading, there wouldn’t be any need to pay anyone. A crypto broker is bound to charge you a commission. The beautiful thing to do is to weigh its numerous advantages against its charges to know whether it is worth staying with. On the extreme, a crypto broker that is not reputable could be responsible for your loss of money.
How To Know A Regulated Crypto Broker
Most countries do not regulate Crypto brokers. Some countries like the UK and its Financial Conduct Authority demand that cryptocurrency brokers be regulated. Apart from this, you can tell whether a broker is reputable. Some signs will give you a hint to stay off certain brokers. These signs could be:
- non-existent services and products;
- unrealistic offers;
- questionable marketing methods;
- the hidden identity of brokers;
- any other too good to be true offers promised.
Always be careful and check your brokers before you start working with them.