Whilst Bitcoin is an extremely easy system to get up and running, the process is quite different to opening a traditional bank account. Because there is no direct body responsible for looking after your Bitcoin, you are solely responsible for keeping your Bitcoins secure.
People store their Bitcoin in a "wallet". Wallets come in a variety of forms. They can exist on the web, on hard drives, on USB keys, even on physical paper. These wallets contain public and private keys. These are essentially like passwords which allow Bitcoin owners to send funds to other wallets. The easiest way to understand the concept of wallets is to think of them as a bank account for Bitcoin.
However, unlike a traditional bank account, if funds go missing from your wallet, then you have no support to get them back. The funds are gone. The same applies if your wallet is stolen or otherwise hijacked. No one will be there to help you get it back.
For this reason, Bitcoin ownership can be dangerous if you do not take the right precautions. In the grand scheme of things, Bitcoin theft is low in comparison to the number of transactions that are carried out every day. However, there have been occasions when large amounts of Bitcoin have been stolen. Bitfinex, a Chinese Bitcoin exchange was recently the target of a $72 million heist. This resulted in the mass loss of Bitcoin from user accounts.
Not only was the Bitcoin lost, this piece of news also had a huge impact on the Bitcoin market. The price of Bitcoin quickly dropped by over 23%, dealing a double blow to the world of Bitcoin. This highlights one of the main issues with Bitcoin ownership: if you do not take security seriously, you could become victim to Bitcoin theft.
However, trading Bitcoin on CFD avoids this situation entirely as you never own any Bitcoin in the first place. You simply own the CFD. Furthermore, in the above scenario, if you had a feeling that the price of Bitcoin was going to decline, it’s possible to profit on this with CFD trades.
This is because with CFDs you are betting on the direction of Bitcoin’s value changing. If you predict movement in the right direct, you profit.