As of 22 September 2021, the global crypto market stands at $1.87 trillion with a total market value of more than $134 billion, as reported by Coinmarketcap. This goes to show how massive this market is, and the demand is only increasing.
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.
The exchange of crypto coins must involve a thorough strategy or at least a good knowledge of coin trading. Some trading platforms include transaction fees or commission for every exchange, and since this method has been long used, investors have no other option than to pay this commission.
Does coin swapping have a place in crypto exchange?
Coin swapping is a different way to trade crypto. Unlike coin trading, swapping crypto coins is seamless and quick (if you’re looking to change from coin A to coin B, you don’t have to first exit to INR and then buy coin B using the INR). The whole process is to convert one crypto coin into another coin without the need for fiat currencies. Several exchanges, especially decentralized ones, have incorporated this technology.
Coin swapping works similar to coin trading, except the latter involves fiat currency.
Exchange platforms have swap options with choices of swapping pairs: the more swapping pair options, the better analysis of exchange. There are lots of exchange platforms providing crypto swaps with hassle-free and user-friendly dashboards.
The investor has to invest their choice of amount and select the swapping option for conversion. To be more clear about its working, let us assume a person has to swap Bitcoins for Ethereum.
Firstly, the person has to choose the swapping pair. Here it is, Bitcoin-Ethereum.
Secondly, the recipient’s address has to be entered. And once the coin swapping is finished, the swapped coin will be digitally stored in the recipient’s wallet.
What makes the investor choose between swap or trade of a crypto coin? Well, both have their pros and cons. The final choice lies in the market volatility of a cryptocurrency, the going market rates for the swaps, and the investor’s specific requirements. What’s undeniable is that it’s certainly useful if you’re looking to switch between coins. It’s certainly a financial innovation that makes the crypto market more vibrant and easy to navigate.
In the end, you need to decide for yourself which method best suits your needs and then decide on a suitable exchange to conduct your coin trading or swapping.
Several exchange platforms serve both trading and swapping of crypto coins like WazirX. They provide safe and secure digital transactions of Bitcoin and other cryptocurrencies such as Ethereum, Ripple, Litecoin, and more. With BTC pairs on WazirX, you too can swap your Bitcoin directly for other altcoins.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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