Bitcoin is an interesting topic and gaining traction at many fronts. I think it will shape up how offshore brokers operate and how you can simply forget the restriction posed upon us by our motherland and its political lobbyists who keep corporate democracy at bay.
Sharing what I know about BitCoins and BitCoin brokers
Why Bitcoins ?
Bitcoins is a decentralized peer to peer money that is honored by various exchanges (bitcoin exchanges) and it can be converted into any currency at any time (even on weekends)
Why is it so hyped and so important ?
There are many reasons for it, but for the sake of this post I will hit on the few most important of them
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Because its a decentralized money and not controlled or regulated by any regulator, its is not under the purview of AML (anti money laundering policies and “Enforced KYC” policies) and hence regulators can not stop anyone from sending bitcoins to anyone else in the world. It is (atlast till now) partially anonymous. Which means that you don’t break any law when you send Bitcoins across the borders because you technically didn’t send Money but a digital asset. Just like you send an email across the borders without breaking any rules. Since its not Money and not under the authority of Central Banks, CFTC can not put their nose in when you use them for forex trading.
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Because it’s instant and does not have any cost. Technically Im able to send bitcoins (or USD equivalent Bitcoins) worth 1 Million USD or 1 USD by paying 22 cents ONLY.
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You can use your bitcoins to shop directly on Amazon.com overstock.com (and many more), its just as good a money. Or you can convert them into your respective local currency at the click of a button provided you have an account at a bitcoin exchange or with any website that acts as a bitcoin converter. I have listed a few of the websites that you can use to convert your local currency into bitcoins and vice versa.
NOW MOST IMPORTANT
Bitcoin is a latest currency and still in its infant stages. That means its value can go down to Zero or can go to the moon. There is no guarantee about its future value, infact it moves up and down by 20% in matter of days. So it is NOT advisable to keep your savings or your brokerage accounts in Bitcoins.
A major consideration when thinking about BitCoin Brokers: You should NOT take risk on Bitcoins with your broker. Your broker should be able to convert Bitcoins into your native currency and your account should be denominated in your local currency. For example, if you are a US trader and you send 10 Bitcoins to your broker worth 15,000 USD, your brokerage account should show 15,000 USD and NOT 10 BTC
The reason I say so is because Bitcoins can move wildly in one direction or another. If your brokerage account is denominated in BTC, then your margin utilization will fluctuate, even if your positions are not moving.
Lets take a hypothetical scenario. Say you have 10,000 USD in your account and your account is denominated in BTC. If your positions move 1% in your favor BUT the bitcoins depreciated by 10% (like I said, it can move 10% up and down easily) you will be losing money on your account and not making money. It has a compounding risk effect on your portfolio.
So either you not time your trade based on Bitcoins’s value + value of the currency that you are trading or you simply subject your portfolio to the wills of the God or that of Bitcoin value.
CRUX :
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So you should ONLY use bitcoins to Fund your trading account BUT should not keep your account balance in BTC.
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Your broker should be able to give your deposit in your local currency based on how many bitcoins you send them
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When withdrawing, your broker should give you the option of receiving Bitcoins or fiat money in your bank account if you have made the deposit in bitcoins.
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Most importantly if you are still not comfortable or versatile about the new Bitcoin economy. Get comfortable. It is totally worth it.
I’m not here to promote any specific bitcoin exchange or any specific bitcoin broker but I have reasonable experience in dealing with bitcoins and I see the advantage of doing so
To help those who are new to bitcoins, based on the info I have so far:
Here are the exchanges (regulated ones) that will open your account and let you buy and sell bitcoins for your local currency and let you freely move your bitcoins to any bitcoin address
here are the brokers that accept bitcoins and will give you account in your local currency (the preferred way)
Here are the brokers that accept bitcoins but will give you account denominated in BTC (the Not so preferred way)
- whaleclub.com
- pigtree.com
- evolve.markets
To make things more sensible [read easy], Start to think about Bitcoins as your email. Its an address (like an email address or a bank account number to hold your monetary value). And sending money from one bitcoin address to another is similar to sending an email or doing a wire-transfer just without the need of a bank.
I have added whatever little experience I have so far and I will keep adding my thoughts to it. I believe it is relevant to this thread because (i believe) it makes our life way better in avoiding CFTC and banking nuisances if we use bitcoins. I hope this helps