Trading Pairs In Cryptocurrency

Booming trade and exchange occurring in the digital platforms have attracted many traders and investors to invest in this virtual market.

Every market is fueled by the currency which the user prefers for the marketing. Sometimes in order to earn more profits, people shift their currencies by buying or exchanging currency for currency. Just like in traditional markets, for example, people exchange rupees for a few dollars and then use those dollars to make more profits in terms of dollars. Similarly in online Automated-Markets, various cryptocurrencies are also exchanged. This exchange works in pairs called “Trading Pairs”.

What is the base currency?

Before we discuss the working of Trading-Pairs, first we need to know about base currency. The currency that you want to exchange to get another currency is your base currency. For example: If you possess bitcoin or BTC and you want to exchange your BTC with Ethereum, ETC, then your BTC will be your base currency.

How Do Crypto Trading Pairs Work?

There are various platforms of trading where you will find many pairs that you could use for exchanging your currencies and tokens. But, if your base currency is not paired with the asset/currency you want to have, then the situation is different. In this case, first of all, you will have to find an asset that is paired with your base currency and which is also paired with the asset you want. After that, you will exchange your base currency with your paired asset and then exchange that paired asset with the asset/currency you wish to have.

For example: If you have an INR and you want to exchange it with USD. Now if INR/USD pair is available on your trading platform you can exchange it easily, but, if either INR or USD are not available in pairs, you will have to look for another option that is paired with both your base currency (i.e. INR in this case) and the asset you wish to exchange with (i.e. USD in this case). Now, let’s say, for example, if you have BTC paired with both INR as well as USD, then you can first change your INR with BTC and then exchange this BTC with USD.

Why do People use Trading-Pairs?

• Every currency has a different asset value, and this gap between the assets helps the user to earn profits, like a person who spends in rupees but earns in dollars.
• It also enables crypto-savvies to exploit arbitrage opportunities.
• It also helps the economist to compare the differences between the currencies.
• A large number of transactions can be made within seconds.

Final Thoughts

To work with the Trading Pairs, first, we need to compare asset values of various exchange tokens/coins/currencies. For better understanding, we may also exchange small amounts in the beginning and examine the resulting asset values.

After learning about profits and investment options obtained by different trading pairs, you can choose or pair with the desired currency.

If you have enough funds to invest on a large scale or are interested in regular arbitraging opportunities, you always have pairing options available. However, it might be a bit risky if you are a beginner.