Cryptocurrency can be quite intimidating for many people who are new to it. However, it’s not a labyrinth if you know the basics of crypto trading. We agree that it’s not easy at the beginning but getting used to smartphones wasn’t easy when they were first introduced. Look around now, we hardly see people who don’t own smartphones (or at least phones). It’s the same with the cryptocurrency, once you know enough about them, it’ll seem less complex. In this article, we are going to explain what are trading pairs in cryptocurrency.
What are Trading Pairs in Cryptocurrency?
If you visit any cryptocurrency exchange, you’d see a lot of cryptocurrency pairs like below:
You can see that the cryptocurrencies are in pairs with some base cryptocurrency like BTC, ETH etc… These are “Trading Pairs” in cryptocurrency. A cryptocurrency trading pair is a trade between one type of cryptocurrency and another. For instance, with BTC/ETH, you can buy Ethereum with Bitcoin or seel Ethereum for Bitcoin. It’s just like exchanging different fiat currencies. So, not only can you buy cryptocurrency using fiat currency like USD, you can buy one cryptocurrency with another.
Why are Trading Pairs Important in Cryptocurrency?
Now that you know what trading pairs are, you might wonder what’s the use of them. Well, there is a simple answer for that – “More Profits.” Trading cryptocurrency with other cryptocurrencies is more profitable to trading with fiat currency. If you get the hang of trading pairs, you can reap profits with the same investment.
Let’s take an example for your better understanding on the subject. Consider that you have some Bitcoin and fiat currency like USD and you want to purchase Ethereum. Say, you purchased 10 ETH using bitcoin at a value of 0.1 BTC. Now when the price of ETH goes up and Bitcoin goes down, it means you can buy more Bitcoin with your ETH. So, let’s say that the ETH/BTC value is at 0.15 BTC now which means you now have 1.5 BTC if you trade ETH for BTC. So, you’re holding 0.5 BTC more than before.
Sometimes, even though the cash value of your cryptocurrencies remains same, the number of coins you hold increases. If you could time the trading correctly using trading pairs, you would end up with more coins. So, when the value of the coins goes up again, you’ll have more cash value for the cryptocurrencies you hold. However, be aware that you could also wind up with worthless coins if you trade valued coins with some scam/Ponzi cryptocurrency.
So, now that you have an idea of the trading pairs, do your research with various trading pairs and increase your coins.