Cryptocurrencies are all the rage right now. Bitcoin, Ethereum, Litecoin, and other cryptocurrencies have seen substantial price increases in recent months. Many people are trying to get into the cryptocurrency market, but they don’t know where to start.
According to Forbes, since the birth of decentralised finance in late-2019, Ethereum has had a firm grasp over the entire market. As there are various cryptocurrencies in the market, it is crucial to understand the concept before making any transactions.
This post will answer some of the most common questions about cryptocurrencies, like what is OTC crypto, decentralised currencies, and how to trade OTC crypto.
Understanding OTC Crypto
So, what is OTC crypto? Well, OTC stands for “over-the-counter.” Over the counter, crypto trading refers to buying or selling cryptocurrencies directly with another person without an exchange.
It is a popular way to trade for two reasons:
1) No Fees:
Because you are trading with another person, there are no fees associated with the trade. It is a significant benefit for many people as many exchanges charge high fees for trades. You just need to make sure that the person you are trading with is a legitimate trader. The best method to do this is by checking their past trades and reviews.
If you are uncomfortable trading directly with someone, a few exchanges offer OTC services.
Trading OTC will give you more privacy as there is no publicly visible buy and sell orders. Centralised exchanges often have to comply with government regulations, including revealing user data.
OTC trading allows you to trade cryptocurrencies without going through an exchange.
Other Crypto Questions Answered
1) What is a Decentralised Currency?
A decentralised currency refers to a digital asset not controlled by any central authority. Bitcoin is the first and most well-known decentralised currency. Ethereum, Litecoin, and other cryptocurrencies are also decentralised currencies. Decentralised currencies are often more trustworthy than centralised currencies because no central authority controls them. They are also often faster and more efficient than centralised currencies.
Centralised exchanges are often slower and less reliable than decentralised exchanges. For this reason, many people are choosing to trade cryptocurrencies on decentralised exchanges.
2) What Is The Difference Between A Centralised And Decentralised Exchange?
A centralised exchange is a digital marketplace where users can buy and sell cryptocurrencies. Centralised exchanges are often run by companies and are regulated by governments. Users often run decentralised exchanges and are built on a blockchain.
The primary difference between centralised and decentralised exchanges is that no central authority controls a decentralised exchange. It means that the users control their funds, and there is less risk of the exchange being hacked.
Governments often regulate centralised exchanges and risk being hacked to control user funds. Decentralised exchanges also often have faster transaction times.
3) How to Trade With OTC Crypto?
If you want to trade OTC crypto, you need to find a reputable trader. The best way to do this is by checking their past trades and reviews
If you are uncomfortable trading directly with someone, a few exchanges offer OTC services. Once you have found a reputable trader, you need to agree on a price and make the trade. Make sure that you have a secure way to store your cryptocurrencies. Here are some ways to do this:
- a) Hardware Wallets
Hardware wallets are the most secure methods of storing cryptocurrencies. You can set up a hardware wallet by purchasing a reliable brand from an official website and writing down the recovery phrase.
- b) Paper Wallets
Paper wallets are a less secure option, but they are easy to use. You can create a paper wallet by downloading an online generator and printing out the generated key.
- c) Cryptocurrency wallets
Cryptocurrency wallets are the most convenient way to store cryptocurrencies, as you can access them on your phone.
However, it is essential that you only use reputable wallets such as those provided by exchanges or hardware wallet companies.
4) What are The Additional Benefits of OTC Trading?
- a) Trading in Large Amounts
OTC crypto allows you to trade cryptocurrencies in large amounts. It is beneficial to buy or sell a large amount of cryptocurrency.
- b) Price Negotiation
OTC trading allows you to negotiate the price of a trade. It is better to understand the market before making a trade.
- c) Less Volatility
OTC trading is less volatile than other types of crypto trading as it allows you to take your time to make a trade. Volatility is based on factors like price and time.
- d) Less Slippage
OTC trading allows you to avoid slippage. It is beneficial because slippage can decrease your profits.
In conclusion, OTC trading is a safe and convenient way to trade cryptocurrencies. It offers several benefits and allows you to trade in large amounts. You must find a reputable trader and secure way to store your cryptocurrencies.