How To Profit From Bitcoin Without Owning Them

You Don't Have To Own Bitcoin To Profit From Them

Bitcoin is an incredible movement. This new crypto-currency has caught the attention of many and for good reason. Bitcoin is essentially a bet against central banks. A bet that financial markets will level themselves. But that's a different story entirely.

Today, we're going to talk about something I get asked quite a bit. That question is, “Do I have to own bitcoin to profit from the currency?”

The answer is no! Today, we'll talk about why bitcoin is actually a great asset for derivative investments like binary options.

Why Do I Get Asked This Question In The First Place

When I first got asked this question, one of the first things that came to mind is “Why?” However, as I dug deep into the bitcoin market, I started to realize that the answer was clear. At the end of the day, bitcoin is a currency that's designed in secrecy.

The anonymity associated with the currency helps to increase its demand, but also makes the market scary for new comers. After all, there's been several cases of bitcoin simply disappearing out of thin air. So, I can definitely understand why an investor would want to take advantage of trends in bitcoin without actually owning the crypto-currency.

What Are Derivative Investments And Binary Options

Before we get into why bitcoin makes a great derivative asset, it's important that you understand what a derivative is, and how they are often traded. A derivative investment is an investment that derives its value from something else. This means that you don't have to own the asset to make money on it.

One of the most common of these types of investments is known as binary options. Binary options traders never actually own the underlying asset; in this case, bitcoin.

Instead, they simply make predictions with regard to which direction the value of the underlying asset is headed. So, when trading bitcoin binary options, you're predicting whether the value of bitcoin is going to go up or down. When making the prediction, you purchase a binary option signaling your prediction. If your prediction is correct, you are in the money and you realize gains. However, if your prediction is correct, you're out of the money and you realize losses.

Why Bitcoin Is A Perfect Asset For Binary Options Trading

When trading binary options, you have the ability to make money no matter what direction the value of bitcoin is headed. So, when trading binary options, assets that see high amounts of volatility just so happen to be the best assets to trade. That's because increased volatility leads to large amounts of opportunities surrounding the asset.

Bitcoin is a currency, and there's no asset class in the world that sees higher demand than currency. Think about it, everyone wants more cash! As a result of the incredibly high demand for currencies, the values of currencies are constantly fluctuating.

Ultimately, the currency market is the most volatile market in the world; meaning that it has the most opportunities for the savvy trader.

However, bitcoin goes one step beyond your normal currency. You see, bitcoin traders enjoy all of the volatility that you normally see with currencies with one added perk. In the currency market, the volatility is seen through very small price movements. However, when it comes to bitcoin, the size of the movements we see are more like stocks.

Ultimately, bitcoin sees vast swings in value. This type of movement makes predicting trends an easier process and leads to higher profits for traders.

Final Thoughts

If you want to get involved in the bitcoin revolution, but you're not ready to buy and sell the currency, don't worry. There are ways that you can make money from the trends without ever owning bitcoin. So, what are you waiting for? It's time to start trading!

Written by Bitcoin Mining on August 23, 2016.