- Bitcoin is a public network with a hard cap of 21 million coins, not a company stock
- Holding bitcoin in a wallet is not the same trade as a bitcoin CFD at a forex broker
- Losing the private keys, or sending coins to the wrong address, is usually final
- Price volatility and weekend gaps matter more than slogans about digital gold
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What Bitcoin actually is#
Short Answer
Bitcoin is a public list of transfers that anyone can check. New coins are created on a schedule that stops at 21 million. Nobody owns the network the way a company owns a product.
Detailed Explanation
The design was published in 2008 as Bitcoin: A Peer-to-Peer Electronic Cash System. The network went live in 2009. People who run the software agree on which transfers are valid. A transfer is authorised by a private key. If you do not control that key, you do not control those coins, even if a website shows a balance with your name on it.
The 21 million figure is a protocol limit on new issuance, not a promise that the price will rise because coins are scarce. Coins already issued can still be lost, locked, or sold. Scarcity does not set a fair price.
Example
A reader buys 0.01 bitcoin on an exchange and withdraws it to a wallet whose backup phrase they wrote down offline. They hold the coins. A second reader opens a BTCUSD contract at a forex broker. They have a price bet. Only the first reader can send bitcoin to another address.
Common Mistake
Calling a broker balance "my bitcoin" when the contract never delivers coins, or leaving coins on an exchange and assuming that login is the same as a private key.
Professional Tip
Write down, in one sentence, whether you want price exposure or coins you can move. Then pick the product that matches that sentence. The crypto CFD guide covers the contract side.
Bitcoin and a forex account are different products#
| Question | Coins in a wallet | Bitcoin CFD at a broker |
|---|---|---|
| What do you hold? | Bitcoin recorded on the network | A contract that tracks a price |
| Can you send it on-chain? | Yes, if you hold the keys | No |
| Who can freeze the balance? | Not the Bitcoin network; a custodian can freeze coins they hold | The broker, under its terms and local law |
| When does the market close? | The network runs through weekends | Many CFD books widen, gap, or pause |
| Main ways to lose | Price, fees, lost keys, sending to a wrong address | Price, spread, leverage, gaps, financing |
XM and similar firms may offer a Bitcoin CFD where your entity allows it. That is still a CFD. See oil, stocks and Bitcoin on XM.
What moves the price, and what does not#
Short Answer
Bitcoin's price is whatever buyers and sellers agree in that venue. Headlines, dollar liquidity and leverage in derivatives can move it quickly. The white paper does not forecast next month.
Detailed Explanation
There is no earnings report and no central bank setting a Bitcoin policy rate. Large holders can sell. Derivatives can force liquidations that push the spot price. A forex trader who sizes BTCUSD like EUR/USD is using the wrong volatility. Weekend gaps are normal in crypto and unusual in major FX sessions.
Regulation is national. An exchange that serves one country may be blocked in another. A price on one screen can differ from the price you can actually deal.
Example
A trader risks 1% of a forex account on EUR/USD with a 20-pip stop. They then risk the same cash on a Bitcoin CFD with a stop that is far too tight for a 3% hourly swing. The stop is hit by noise, not by a broken idea.
Common Mistake
Treating "digital gold" as a description of risk. Gold CFDs and bitcoin do not share the same gap behaviour, contract size or weekend liquidity.
Professional Tip
If you trade the price, define the loss in account currency first, using the same habit as the risk-management guide. Do not copy an FX lot size onto a crypto symbol.
Custody in plain language#
Short Answer
A wallet holds keys, not a file called "a bitcoin". Lose the keys and the coins stay on the network with no help desk that can restore them.
Detailed Explanation
An exchange account is custodial: the company holds the coins and shows you an IOU. That is convenient and it is a credit risk. A self-custody wallet removes that company and puts the backup phrase in your hands. Phishing sites and fake support accounts are a common way people surrender those keys.
Sending coins is not a card refund. A wrong address or a wrong network is usually permanent.
Example
Someone "supports" a reader in chat and asks for the 12-word backup "to verify the wallet". That sentence is the theft. No legitimate service needs the full backup phrase.
Common Mistake
Photographing the backup phrase, emailing it, or storing it only inside the same exchange account the coins were bought on.
Professional Tip
If you are not ready to store a backup offline, do not withdraw a large balance to a wallet you do not understand. Leaving coins with a custodian has its own risk. Pick one and know which risk you accepted.
Checklist before you touch Bitcoin#
- Decide whether you want coins or a price contract.
- Read the fee, the spread and, for a CFD, the leverage and financing.
- Confirm the product is legal for you to use where you live.
- For a wallet, write the backup offline and never type it into a website.
- Size the position from a maximum loss, not from a headline.
- Ignore anyone who promises a fixed return, a recovery service, or a "signal group" that needs a deposit first.
Glossary#
| Term | Meaning |
|---|---|
| Bitcoin | The network and the asset, ticker BTC |
| Private key | The secret that authorises a transfer |
| Wallet | Software or a device that stores keys |
| Exchange | A company that matches buyers and sellers, and often custodies coins |
| CFD | A contract that pays the price difference. You do not receive the asset |
| Satoshi | The smallest bitcoin unit most wallets display. 100 million satoshis equal 1 bitcoin |
Related reading#
Trading Bitcoin, or a contract on its price, can lose the money you put in. Past rises are not a forecast. Read the risk disclaimer.