As you might know, cryptocurrencies are digital assets that can be bought, sold, or otherwise traded online. They use blockchain technology for processing online transactions. Blockchains, which ensure the integrity of transactional data, is a crucial component in cryptocurrencies.
The most popular cryptocurrency in usage is Bitcoin, among others. As of August, over 18 million bitcoins were in circulation with a total market cap of around $860 billion, with the estimate changing frequently.
Cryptocurrency may seem foreign to some, but a certain level of exploration helps in understanding how it works.
Two important terms used in crypto exchange are swap and trade. In general, a swap means exchanging a product between two parties, but in cryptocurrency, swapping means exchanging one cryptocurrency for another directly, hence the phrase coin swapping.
Alternatively, trading means buying and selling cryptocurrencies (or coins) using exchange platforms. Investors prefer the coin trading method, but it is slowly being replaced by coin swapping in recent times.
What happens in cryptocurrency trading?
In all these years of cryptocurrency exchange, coin trading is the preferred way for transactions. For people unaware of the actual transaction process – it is an exchange of crypto coins to a fiat currency and converting this currency into another crypto coin.
So when someone says they just traded crypto, you would know that it simply means coins being exchanged for fiat currency or vice-versa. It does involve a few other processes like selecting a good exchange platform, especially a leading one such as WazirX, and uploading all required documents for the KYC process.
Once documents are verified, a person can open an account with that platform and start trading using their funds. Once a currency is exchanged for a crypto coin, they can store the cryptocurrency either in a digital wallet or convert it again to the currency of defined value.