Sharan Nair from CoinSwitch breaks down the nitty-gritty involved in crypto trading
How do you ensure liquidity on your platform?
BTC, DOGE, ETH, MATIC, ADA.
The above-mentioned symbols/terms are not some recently discovered alien code language. In fact, these symbols are among the most traded crypto assets on CoinSwitch.
Be it investing in equity, commodity or crypto, it’s important to understand the exact functioning of that particular asset class.
So, Sharan Nair, Chief Business Officer, CoinSwitch helps to answer the most vital questions related to the functioning of crypto trading.
Is crypto trading similar to equity trading or investing? If not, what differentiates both?
Yes, crypto trading is quite similar to equity trading or investing. Crypto markets are more volatile and make trading more profitable and equally risky. Unlike stocks which are held in a centralized system, crypto users can also take self-custody of their crypto assets.
How are cryptocurrency transactions recorded?
Cryptocurrency transactions are recorded on the blockchain, which is a public ledger. Verifying these transactions is the full-time job of crypto miners.
What do these lingos stand for - Crypto, coins, tokens, ICOs. Explain it in brief.
·Crypto - ‘Crypto’ is short for cryptocurrency.
·Coins - ‘Coins’ are cryptocurrencies with their own blockchain networks—for example, Bitcoin or Ethereum.
·Tokens - ‘Tokens’ are cryptocurrencies that don’t have their own blockchain networks and rely on the protocols of another coin to support themselves. For instance, Tether (USDT) is a token based on the Ethereum blockchain.
·ICOs - Initial Coin Offerings are events when a new coin is launched in the market. The general public can buy these coins through other currencies as investments. ICOs are the crypto-version of Initial Public Offerings in the stock market.
Why are there so many cryptocurrencies?
While cryptocurrencies are all based on the blockchain, every network fulfils a different fundamental goal. While some coins are meant to be fast and efficient, others serve as excellent stores of value, etcetera.
Can you tell me how exactly buying a Crypto works? Do the buyers actually get purchased crypto in their wallets?
Yes, buyers do get actual crypto coins in their wallets when they make a purchase. However, it’s not as simple as you might think. Wallets don’t actually store crypto coins; they hold the private keys of coins you own through which you can access those coins on the blockchain. The coins themselves never leave the blockchain.
When anyone buys Cryptocurrency, do they buy the Crypto itself or, is it a CFD kind of instrument?
When anyone buys cryptocurrencies, they actually buy the crypto itself. Their wallets store the private keys to those coins via which they can be accessed and traded on the blockchain.
Does the trader get any leverage on the platform to trade?
No, CoinSwitch does not provide leverage to traders currently.
How do you ensure liquidity on your platform? (I mean, for every buyer, is there actually a seller or, for every seller is there actually a buyer? Or, does the exchange/platform acts as a counterparty? How does this exactly work, if you can please explain for the benefit of the readers)
CoinSwitch combines liquidity from numerous exchanges worldwide to find buyers and sellers for cryptocurrencies. Whenever a seller sells a cryptocurrency, there’s a buyer who’s willing to purchase. That’s how the system works.
How volatile cryptocurrencies are? And, is there any option to do a hedge in cryptocurrencies?
Like all other asset classes, macroeconomic factors affect the crypto too. Depending on their risk appetite and time horizon, users can follow various strategies to manage trading risk.
What are your plans for the year 2022?
In 2022, as a crypto-first organisation, we will be working harder to educate the new few million users on financial freedom and provide them with more investment options in addition to crypto-assets on our platform to help them diversify their investment portfolio.