Ever since the booming cryptocurrency prices in 2017, more and more enthusiasts have wanted to invest in this new market that boasted financial revolution, prosperity, and change.
Although the underlying technology – blockchain, is truly disrupting the banker-owned economic landscape, this doesn’t necessarily mean that your pocket’s content will skyrocket and you’ll suddenly end up on the moon.
In many cases, investing in cryptos did pave way to financial freedom and early retirement. Many investors did actually end up on the moon, but it is crucial to understand that most of them had undergone rigorous training before securing their moon spot.
Those left behind on the blue dot have had their pockets and hopes shattered by the crypto winter which subsequently followed the 2017 moon departure. In other words, crypto investing is risky business, reason why it’s called the “wild west of money.”
So what do you do when you are hooked on the crypto current and want to invest?
Social Trading’s Potential
First of all, there’s not much (if at all) that you know about crypto. Your enthusiasm and moon thoughts will probably overcome you initial refraining, and you’ll end up in rugged terrain where a bad move could put you out of business.
Where to start looking for guidance? How do I know which investments are best? What’s the most appropriate moment to pour my money into the market? These are but a few questions new crypto enthusiasts ask before starting their savage endeavor.
To cut this short, this feature dubbed “social trading” is here to sort out all the troubles new crypto investors have.
Catchphrases like “make money while you sleep” have outlined the social trading feature, but the message doesn’t reflect the true nature of this innovative feature. To put it bluntly, social trading means making money while learning…and while sleeping, of course.
What is Social Trading
Simply put, it is a novel financial instrument aimed at providing knowledge and a passive income to any aspiring trader, as well as to those most experienced.
In other words, social trading is a social platform where you can connect with like-minded individuals and share market ideas, trading strategies, and basically any other information relevant to the space.
You can also earn passive income by copy trading other user’s actions on the platform.
Before delving deeper into this topic, let’s first start by highlighting the benefits of social trading:
- If you are new to the crypto scene and are planning to invest in the plethora of projects out there, your best chance of finding adequate knowledge and advice is by joining a social trading platform.
Here you’ll be able to analyze the different profiles of both traders and investors and eventually engage with them.
The process of determining which investments are best will become smoother after discussing with legitimate traders/investors about their strategies and portfolios of choice.
You’ll gain better understanding of the market by simply scrolling through discussions on the platform or by starting conversations yourself. A big plus of social trading is that most activities on the platform are transparent or require some kind of action to unlock (like spending some tokens).
To sum it up, the social trading feature paints a robust environment where crypto enthusiasts, be them new or experienced, have the opportunity to engage with one another to perfect both their trading and investing strategies.
What is Copy-Trading
If you don’t have time, nor care to learn about trading, you can determine which trader performs well (based on own risk preferences, stats, and ROI) and simply copy his or her trades.
By mirroring professional trader’s moves, you remove the need of an actual ‘money manager’ (which obviously costs additional fiat or a consistent share of your pie) and also greatly mitigates your investment risk. This process is done automatically, so you can literally earn while you sleep.
To repay professional traders for allowing you to copy-trade their moves, a small fee is usually required to pay for this service. This way you reward the traders for their effort and transparency, and you will benefit from effortless passive income. Remember that you will have positive returns only if the trader you are copying is successful.
Summing it up, copy-trading is a popular instrument, part of social trading platforms, which enables users to mirror the moves of a professional trader by paying a small fee. This incentivizes providers to take more calculated trading decisions in order to preserve their ranking on the social trading platform, feat which guarantees a larger user following.
At the same time, you’ll be able to engage in discussions, set risk limits, as well as set a limited trading budget. You may follow and copy more traders at once and choose to allocate percentages of your trading budget to each of them.
Copy-Trading Risks
As innovative as it is, copy-trading doesn’t come without its risks. However, trusting part of your budget to a professional trader is far better than trading yourself (if you are a beginner and have no established trading notions).
Probably the riskiest move you can make is directing 100% of your capital to a trader who enjoys risky calls. The best way to mitigate this risk is by spreading your trading capital among a few other trusted traders who apply diverse strategies in their trading.
Other than this, there aren’t any drawbacks other than the choices you make. Research your traders thoroughly and you will greatly lower the risk of losing your capital. Keep in mind that you can, at any time, reach out to a trader you are following to discuss about any performance issues.
Crypto Social Trading Platforms
While the social trading feature is already a couple of years old, it is only now piercing the cryptocurrencies market.
FOREX trading platforms have highlighted this novel feature and seen tremendous success. Although there are a handful of tradable cryptos (those already consecrated) on these platforms, the ‘altcoins’ have failed to make it in the circuit.
For those who started their investing endeavor with cryptos, not being able to ‘social trade’ could be a major impediment for them due to lack of relevant knowledge. I’m stating this as the crypto market is accessible to virtually anyone, unlike stocks which require a hefty capital and decent knowledge to begin with.
So there is so much unexploited potential with cryptocurrencies, especially with the upcoming mass adoption initiatives. Such a popular feature as ‘social trading’ cannot be missed in the crypto space, reason why some platforms are already paving way to it and are doing a great job.
1. Blockport – The Hybrid Social Crypto Exchange
In a nutshell, Blockport is a user friendly crypto platform based on a hybrid infrastructure which allows people to purchase crypto tokens through a fiat gateway and, of course, copy other traders’ moves.
There are just so many interesting features the team behind Blockport promises to implement. If you are curious about this project, you can read my previous article explaining all that in detail.
Their main objective is to make crypto currencies widely available to new users to the space. To achieve this, Blockport focuses on a friendly and clean user interface, simplified buying process, a consistent knowledge base backed by their community where new users can learn everything they need to become successful traders or investors, and last but not least, the social trading feature aimed at incentivizing both professional and aspiring traders to interact with each other and share profits.
The model they follow is similar to what I have described in the above chapters. You’ll be able to follow traders of your liking and copy their trades using the native BPT token. You will then be able to message those traders, write on their profiles, and mimic their moves if their strategies appeal to you.
With a hoard of ‘altcoins’ that will gradually be added to the platform, Blockport will tap into the yet unexplored potential of cryptos through their ‘crypto social trading’ feature. How much of the market they’ll steer their way remains to be seen, as well as if they’ll be the first to touch down.
Blockport has currently launched their open beta where everyone from Europe is invited to join and try the features at hand.
2. Covesting – Professional Asset Management and Copy-Trading Platform
This project brings features like copy-trading and professional asset management to the crypto space.
Covesting focuses more on professional traders, but also welcomes new investors and aspiring traders to try out their vast knowledgebase and passive income features.
Investors will have transparency regarding traders’ portfolios and actions, and will be able to mirror them at any given moment. Their system will do the rest automatically, meaning that your trading activity will correspond to the one you are following.
Traders can earn reputation on the platform and be rewarded with success fees for their efforts. This process will also be automatized, so traders won’t have to deal with any extra details while trading.
"…all trading activity will be recorded in the Model and the trader doesn’t need to do anything else – just continue trading in the comfort of his personal account. Later, the trader will be able to decide whether he wants to “list” his Model at the Covesting platform and make it available for investors instantly or keep it private for a while to build a solid track record.” – reads the White Paper."
Covesting also brings to the table a generous knowledge base that will assist anyone trying to get accustomed to the various trading terminologies and tactics.
Conclusions
Both of these platforms are at the forefront of ‘crypto social trading’ and will bring a massive contribution to the space.
More competitors are walking on their footsteps, but having the head start plus a flawless execution on what they are striving to deliver could turn them into consecrated brands in the near future.
Social trading has experimented a great deal of success, and there is no wonder why. With cryptos looking like a sleeping giant, there’s no saying how popular ‘crypto social trading’ will become in the future. Their potential is patiently waiting to be unlocked.
Are you going to keep away from this opportunity? Or rather head to one of these innovative projects and give crypto social trading and cryptocurrencies a spin?
What’s your take between those two, and what do you think of ‘crypto social trading’ in general?
I’m eagerly waiting to hearing your thoughts on this.
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