What is the Difference between Bitcoin mining and trading?
Mar 07, 2020 18:12
Should you trade the Bitcoin or mine the Bitcoin? This can be a difficult choice to make when you are not sure what mining and trading entails. Each of these has its advantages and drawbacks, and you must make a choice depending on your own level of expertise. To do so, you need to first understand what Bitcoin mining and Bitcoin trading is all about.
What is Bitcoin mining?
Mining refers to a process for validating transactions. When a miner successfully mines a block it is added to a blockchain or chain of records. To do Bitcoin mining, you must have a mining rig made up of high-end specialized machines equipped to solve complex mathematical problems. Miners who can solve these problems are given rewards in the form of Bitcoins.
What is Bitcoin trading?
Bitcoin trading appears to be less complicated; it is much like regular stock trading. You can buy or sell crypto coins via cryptocurrency exchanges like Coinbase or Kraken. You will need wallets to store the crypto coins you earn. Online exchanges will offer you access to multiple cryptocurrencies; there is a proper registration process that demands verification in order to ensure trader’s security. Bitcoins are also widely traded using trading bots such as bitcoin revolution, bitcoin era, etc. Reading this bitcoin revolution review will give you sufficient knowledge about how the trading bots work.
Which should you choose-mining or trading?
For a techie, choosing mining is natural because you are likely to have equipment for it. Mining is also less risky compared to trading, because Bitcoin prices are volatile and the market can swing dramatically causing huge gains or losses. In mining, you have risks too; for instance, the value mined may not be enough to sustain your electricity costs. But you can always join a mining pool or sell your equipment to get cash. But, when you trade Bitcoins and the outcome is negative, you may end up with nothing.
Mining is also less consuming and hectic. Once you have installed the equipment, it will work round-the-clock. You may need to update the software occasionally but the efforts are much less compared to monitoring the market 24x7 when you trade.
Mining is also less stressful compared to trading. Trading involves far too many risks and it is not for the weak-hearted.
But, if you happen to be good with numbers you should give trading a shot. For Bitcoin trading, you are not going to need a high level of expertise or specialized equipment. You will need funds of course but you can always start trading in small amounts. When you trade you have the advantage of choosing from multiple crypto coins, unlike mining where your hardware limits this choice.
Trading offers you the chance to earn much more than mining; the stakes are higher and so are the profits. In mining, you can expect to get returns after six months or so, but in trading, the results are quicker. Even a not-so skilled trader can hope to make profits every day.
So, when you know the benefits and shortcomings of both Bitcoin mining and trading, and the differences between the two, you can make up your mind about which method to choose to get Bitcoins.
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