Cryptocurrency basics and why to invest

What is cryptocurrency

Cryptocurrency is a digital asset that is exchanged online in a decentralized manner: a shared ledger, called a blockchain, where every transaction is recorded and verified by thousands of computers instead of a central bank. Bitcoin, created in 2009, is the first example; today there are thousands of them, including only a handful concentrate most volumes. As for any asset, the price results from the meeting between supply, determined by known emission rules, and demand, driven by users, investors and network utility.

This operation explains two important properties for a investor. First: cryptocurrency markets are never closed, neither at night nor on weekends, which radically changes the issue of surveillance. Second: the absence of a middleman centrally means that security is based on good security practices every holder, hence the importance of the reflexes described on the page security.

Concept	One line explanation
Digital assets	A good that exists only in electronic form and is exchanged peer to peer.
Blockchain	A shared ledger where every transaction is time-stamped and impossible to overwrite.
Wallet	The tool that holds the keys to using your digital assets.
Trading pair	Two assets that are traded against each other, for example BTC/AUD.
volatility	The amplitude of price variations during a certain period.

The transaction journey, from click to registration, always follows four steps:

1. Understanding Cryptocurrencies
2. The order is executed at the price available on the market at that moment.
3. The operation is broadcast to the network that verifies it.
4. It is entered in the common register: the transfer is irreversible.

Why prices move

Cryptocurrency prices react to four groups of factors, often in combination: volume of exchange, which amplifies any movement; news, whether regulatory, technological or macroeconomic; investor morale, which can increase assets without concrete news; namely those large economic balances, such as interest rates or inflation, which encourage risk appetite at the global level.

Factor	Typical effect	Example
Trading volume	It enhances movements in both directions	An hour of high volume moves the price more than a quiet day
News	Quick reactions, sometimes exaggerated	Regulatory announcement from a big country
Market sentiment	Phases of enthusiasm or withdrawal	Profit-taking after several weeks of gains
Economic context	Guides risk appetite	Lower rates make risky assets more attractive

The asset price is formed in the following way: thousands of purchase orders and sales meetings continuously; when buyers dominate, the price of the last transaction rises; when sellers dominate, it falls. Nothing else "decides": it is the sum of the individual decisions, visible in real time in the order books.

What is volatility

Volatility measures the amplitude of price variations. And high volatility means fast and large movements in two senses: quick gains and losses are possible, and sometimes in one session. Low volatility means slow and moderate variations. Cryptocurrencies belong to the first category: this is their most important feature to integrate before investing.

	High volatility	Low volatility
Range of motion	A few percent a day, sometimes more	Fractions of a percentage per day
The pace of decision-making	Positions must be carefully monitored	Regular examinations are sufficient
Risk	Possible quick losses	Slow erosion is possible

What you need to remember: size each position so that a sudden unwanted movement remains tolerable and avoid the action of emotions during periods of high volatility. Platform protection mechanisms, which can suspend trading when the market becomes too volatile, exist just for these times.

What is risk management

Risk management is a set of rules that decide how much you commit, when you cut back, and how much you accept to lose even worse. The basic principles are simple: never expose everything to one means, define in advance the maximum acceptable loss, and some rules apply without exception during menstruation emotional.

The risk framework is made up of three pre-written decisions: the total amount dedicated to the risky asset, never more than you can immobilize without touching; maximum share per position, so no asset can change your situation; and the maximum tolerated loss before stopping the strategy. These three numbers do more for your bottom line than any other indicator.

AuraxAI provides clear information, automated analytical tools and personal support. The user retains control over decisions and funds, and should carefully assess risks, costs and own goals before using them.