The word ‘profit’ has no other meaning, as it is a universal concept focused on achieving maximum returns on a specific operation. Most of the time, the word profit is used to signify some form of financial gain, however, it can also be used figuratively to mean some form of benefit received from a specific action. This versatility is limited to financial operations in modern realities, where trading is the most common form of interactions between people. The buy and sell relationship is just as old as mankind and is the foundation for the development of nations and their economies.
When people have some form of good and exchange that for a universally or locally accepted means of payment, the trade is considered to be concluded. Your trading operations and the profits you receive from them are reliant on quite a number of factors, many of which are beyond your control. Among the factors to consider when calculating profit are:
- The supply and demand relationship for the good or service in question;
- The skills and knowledge of the parties on the subject matter;
- The geopolitical or economic situation prevalent at the time;
- The location of the trade;
- The asset in question.
These and many other factors affect the profitability of the trade, chief among which is the seller’s own ability to position the product in such a way as to make it more attractive to the buyer. And that is what forms profits, so often regardless of the real intrinsic value of the asset in question.
Indeed, there is art to it – to trading. Be it a good or service, the seller must remember one import thesis – they are not selling the good or service, they are selling themselves in the first place. As the great poet Fizuli once said – “we all buy and we sell, we are all bought and sold”. The irony of the given phrase resides precisely in the second half of it, since it embodies the true relationship between the buyer and the seller.
Regardless of how much experience or competence one has, they will never be able to uncover their true potential and achieve maximum profits until they learn to sell themselves. The simple fact of the matter is that people do not buy a product, they buy emotions and experiences they can receive from that product. The same applies to services, which are even more intangible and reliant on the conveyed sense of value they bear and that the seller is capable of transmitting. This is where personal sales skills become essential and are highlighted as key abilities that will accompany their wielder’s success throughout life.
Communication is the basic form of reaching agreements between parties. However, everyone can simply communicate and talk, but few actually converse in a manner that would establish rapport and dispose to one’s self. This skill is vital for interpersonal communication and for ensuring profits. The more eloquent one’s speech, the more attractive their smile, the more convincing their words – the higher the likelihood that people will overlook the deficiencies of a product or service, of even the professionalism and competence of the converses, and buy the product at any price stated, since they will want more of the experience attached to the process.
This is what makes sales of one’s own self so important and make it essential for people to work on themselves and develop their communication skills. Needless to say, not everyone is capable of developing such a set of necessary skills, much less applying them. However, that is no reason to abandon any attempts at doing so and improving one’s own set of skills and attributes.
The word profit received a completely new lease on life with the development of the blockchain industry and the cryptocurrencies it so fervently supported. The adage of stale profits earned on Wall Street suddenly started to seem like an archaic vestige of a bygone era as cryptocurrencies outmatched, outpaced and outperformed traditional assets and commodities in terms of yields.
It is absolutely true that Bitcoin and many other cryptocurrencies can vie for the title of leading assets in terms of investment potential, but one has to bear in mind the associated risks. Cryptocurrencies, regardless of their status or network that supports them, are susceptible to volatility. The underlying reason for such price instability is the demand and supply relationship that applies to cryptocurrencies as well, and is the main factor determining their value from both a market and artificial perspective.
With such realities in mind, it is necessary to first analyze the essence of cryptocurrencies and understand how they were utilized to make profits. Such analysis will reveal that Bitcoins and other cryptocurrencies were used in a variety of ways that do not differ cardinally from the methods applied on traditional markets. This means that cryptocurrencies are no different from commodities, but the approaches to using them for making profits include some special tactics, knowing which is essential to extracting the most benefit from the essence of cryptocurrencies.
To be entirely honest, cryptocurrencies are not what they were originally designed for. They are not commodities, nor are they a means of payment or a utility asset to be used within the frameworks of some services. Why? Because the market of cryptocurrencies and blockchain projects is such a highly competitive and cutthroat environment that it does not foster the development of viable projects that would be able to offer any standalone or independent solutions, apart from games. Why? Because the services users are already used to already exist in the traditional realm and do not require the intervention of blockchain-based solutions.
As such, cryptocurrencies are more of a speculative asset that is both short-lived and profitable. Catching the right moment is therefore vital to identify entry points into a blockchain-based project and then wait and watch the dynamics of its token’s price. This approach is most commonly applied by everyone who is engaged in speculation, since there are two cardinally different approaches to evaluating cryptocurrency and blockchain-based projects – the hold and the active. The first is based on fundamental analysis of the project with firm belief in its prospects. The second is a frivolous short-term approach that relies on scalping the benefits in the here and now by actively entering and exiting various digital assets on exchanges.
Bitcoin is often considered the most coveted cryptocurrency with the highest price. Though originally designed to act as an alternative to the traditional financial system and intended to act as a universal and permissionless means of payment without any oversight from the authorities, the king of cryptocurrencies has since devolved into an investment asset. Indeed, Bitcoin is nothing more than an investment and a store of value, since no one in their right minds would start paying for a coffee using Bitcoins when the price of the asset rides the roller coaster and appreciates on a virtually daily basis.
As such, Bitcoin is seldom used for transactions and guides of trading Bitcoins for beginners always underscore the importance of using the asset as a store of value rather than as an active trading commodity. The supply of Bitcoins is in short supply, since the number of holders ready to sell Bitcoin is not that high for the aforementioned reasons. As a result, most professional traders turn to other cryptocurrencies for their daily operations and find that the latter are just as effective in generating returns in both bulk and large quantities of small orders.
Trading in itself can be divided into a rather large number of subcategories, each of which has its own benefits and caveats. Needless to say, trading is a very high-risk activity that involves the chance of incurring significant losses. The latter are usually sustained as a result of either lack of proper knowledge and skill, or improper analysis of market dynamics and history charts with wrong forecasting of potential movements in prices.
One of the most popular types of trading is spot trading, which involves the purchase and sale of an asset on the spot, capitalizing on its instant price change. The given approach is usually the bread and butter instrument of novice traders who do not have sufficient experience to experiment with more risky types of trading activities.
Another type of trading is called scalping, which involves placing a huge number of tiny orders and then reaping the profits through instant sales once the asset in question gains even a meager upward price tick. Such trading is most often conducted in automated mode through the use of trading bots, which are tuned and set up to buy and sell based on specific instructions and algorithms.
There is also arbitrage trading, which is quite similar to scalping, but involves reaping profits on the price changes of an asset across multiple platforms, even across various geographies on the market. The practice is reserved for experienced traders who know which platforms to resort to and have the proper strategies to apply.
Cryptocurrencies and profits are often inextricably tied by meaning, since the abundance of so-called crypto millionaires that have emerged in the ICO era gave rise to a wave of hype and fascination with the luxurious lifestyle they advertised in their social media channels. It would be fair to say that the luxuries showcased by these people were not earned without any significant effort, and even fairer to say that nothing remains of that opulence today for the vast majority of them. The extreme volatility of the cryptocurrency market literally leveled their earnings, razing their luxurious lifestyle. The lessons of their careers in the cryptocurrency space, and their adventures with Bitcoin, should serve as a very sobering reminder to all that there is no such thing as free profits and that every penny earned comes with great effort and risk.