Broker to Trading

Cryptocurrencies can be traded as CFDs at CFD brokers on online trading platforms.

The brokers in the table support a range of Cryptocurrency CFDs, offering trading platforms for Bitcoin CFDs, Ethereum CFDs, Ripple CFDs and more. But what are cryptocurrencies and what are Cryptocurrency CFDs ?

Define cryptocurrency and explain cryptocurrency

A cryptocurrency is a digital currency. This means that it is used to send payments across the Internet. The Internet is a network of computers, with communications channels. These channels send and receive data. Digital currencies use these channels to send data and make use of computers connected to them to process data.

A cryptocurrency is a type of digital currency which uses cryptography. Cryptography is a way to secure data, whether in the real or digital world. Cryptocurrencies use hashing. This is a program which takes data and creates a digital signature. If the data is changed then the hashing function will change. Different cryptocurrencies may use different hashing programs or functions. Cryptocurrencies use hashing to secure their electronic ledger.

A ledger is a record of transactions in the cryptocurrency. Each cryptocurrency is a token of a network using the structure of the Internet, with computing devices processing data and communicating with each other.

Some networks are more about the cryptocurrency than others, that is some networks are payment networks, others provide services to process other kinds of data (and payments). A key element is that these services are provided in a decentralised form, there is no central processing or control facility.

Part of the way these networks operate include data processors using computers running programs to process data. Different cryptocurrencies may need more or less specialised computers to process payments and some cryptocurrencies use rules to favor some kinds of hardware implicitly or explicitly by using a particular hashing function.

Some cryptocurrencies operate via miners, who plug into the network and process transactions, using computer programs running on hardware. Nodes in the network verify this data which is then added in a block to the rest of the ledger. There is typically a competitive process which a miner wins to get the right to add this block. When the block is added the miner is rewarded.

Some cryptocurrencies do not process data this way. This a key feature of cryptocurrencies. The rules governing the processing of data can be changed, as they are computer programs, operating by rules called algorithms (and these rule changes can help influence the type of hardware used to process data). This happens for many reasons, including dealing with perceived drawbacks of a cryptocurrency implementation and to enable the network to do different things.

These significant rule changes are called forks. They are called forks because they branch off from the list of connected blocks of processed data (which is called the blockchain), creating a new blockchain with different rules. Not all cryptocurrencies use a blockchain structure and may use another type of electronic ledger.

There is no central control system, the rules are the control, determining what happens in the various interacting distributed processes. There is no central authority creating cryptocurrencies, these are created by various means, including as a by product of and reward for processing data, in effect they are mined, indirectly.

Cryptocurrencies can be used to send payments, from wallet to wallet. The blockchain itself can also be used to process other kinds of data, such as running applications. Cryptocurrencies can also be traded, like other markets. This happens on exchanges.

What is CFD trading ?

A CFD is a Contract for Difference. This is a contract between the trader and the CFD provider to exchange the difference in value from the start of the trade to the end of the trade. The CFD is closely based on the value of an underlying financial market, such as a cryptocurrency traded on exchanges. What this means is that it is possible to trade a market without having to own it.

What is a Cryptocurrency CFD ?

A cryptocurrency CFD is a contract between the trader and the CFD provider allowing the trader to speculate on the price movement of a cryptocurrency without owning it. This means that the trader does not need a wallet or other means to store a cryptocurrency, as they do not own it when trading it. They can go long or short (speculate on a rising or falling market) and use leverage for Bitcoin leverage trading and other Cryptocurrency CFDs.