Bitcoin operates as a decentralized digital currency, allowing users to perform peer-to-peer transactions without the need for a central authority. Here's a simplified explanation of how it works:
1. **Transactions**: When you send or receive bitcoins, the transaction is broadcast to the Bitcoin network.
2. **Blockchain**: These transactions are grouped into blocks and added to a public ledger called the blockchain.
3. **Mining**: Miners use powerful computers to solve complex mathematical problems that validate and secure transactions on the blockchain, earning bitcoins as a reward for their workâ”â¶â·.
As for trading strategies, there are several approaches you can consider:
1. **Day Trading**: This involves buying and selling bitcoin on the same day to take advantage of short-term price movements.
2. **HODLing**: A long-term investment strategy where you buy bitcoin and hold onto it, regardless of market volatility.
3. **Swing Trading**: This strategy aims to profit from price 'swings' in the market over a period of days or weeks.
4. **Scalping**: A strategy that involves making dozens or hundreds of trades in a single day to "scalp" a small profit from eachÂčÂČÂłâŽ.
Each strategy has its own level of risk and requires different skills, such as technical analysis for day trading or a strong understanding of market fundamentals for HODLing. It's important to do thorough research and consider your risk tolerance before starting to trade.
Source: Conversation with Bing, 25/03/2024
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