If you’re relatively new to the world of cryptocurrencies, you might not have heard about crypto pairs. Crypto pairs, also termed Trading pairs, are essentially a way of allowing you to exchange one crypto asset for another or for even a fiat currency on an exchange platform.
There are a bunch of different trading pairs that are commonly used on exchanges; for instance, Bitcoin and Ethereum, BTC/ETH is among the most popular crypto trading pairs. But trading pairs don’t specifically have to be between cryptocurrencies; they could also be between cryptocurrencies and fiat money. One should know which cryptocurrencies can be put up as a crypto trading pair with other cryptocurrencies or fiat money because some cryptocurrencies can only be bought with other cryptocurrencies.
Crypto trading pairs are an essential part of running the crypto-economic system, as well as trading on exchanges like Coinbase and Binance. If it weren’t for crypto trading pairs, one would have to convert their crypto into a fiat currency and then finalise the trade by purchasing their desired crypto.
Another reason why these trading pairs are important is that if an exchange doesn’t have your desired crypto trading pair, you would have to create two crypto trading pairs before you can get what you originally wanted. This translates to increased trading fees as you’re performing two trades instead of one. So, this is what we meant by running the crypto-economic system; without trading pairs, it would become a hassle to trade crypto, especially on foreign exchanges. Now let’s get into how you can read these trading pairs and how they work.
Reading Cryptocurrency Pairs
There are two parts to a crypto pair, base currency and quote currency.
The first currency in the cryptocurrency pair is called the base currency. For instance, in a Bitcoin and Ethereum trading pair, BTC/ETH, Bitcoin is the base currency. So, the base currency is essentially the reference currency in a crypto trading pair.
Of course, to make a trade, you need to have the base currency in your possession to complete the trading pair and get your desired cryptocurrency. The most common base cryptocurrencies are BTC and ETH because almost every crypto exchange has existing trading pairs that include these currencies. But it usually depends on the type of trade you’re looking to make. It can even be between a cryptocurrency and a fiat currency or even a crypto and stablecoins trading pair. So, having knowledge of which currencies make a trading pair and which don’t is essential when it comes to crypto trading!
The currency that comes after the backslash ‘/,’ is called the quote currency. Continuing with our sample crypto trading pair between BTC/ETH, ETH is the quote currency here. To understand it in a simpler way, the quote currency is essentially the price of the base currency in the trading pair in terms of the quote currency.
So, this is how you read a crypto trading pair and what a base currency and quote currency mean.
Common Cryptocurrency Pairs
Crypto trading pairs are not limited to crypto; they can exist between crypto and fiat, crypto and stablecoins and so on. Pairs between stablecoins and cryptocurrencies work just as they would with a fiat currency. This is because stablecoins have a set value in a fiat currency, most commonly USD, and they are considered a ‘non-fluctuating’ asset as compared to the volatile nature of cryptocurrencies. People usually make stablecoins and crypto trading pairs to convert their ‘fluctuating’ and volatile crypto asset to a more stable and steady asset. Some common stablecoins trading pairs examples can be USDT/USDC and BUSD/DAI or even BTC/USDT.
Thus, there aren’t a lot of limitations to these trading pairs. But they’re necessary to make the crypto-economic system work. Because without these pairs, crypto trading would become a hassle and would cost a lot of money in trading fees if your trade is a unique one.
There is one more thing you should know about when crypto trading.
Arbitrage
Oftentimes, there are moments when the value of an asset, or a trading pair, might show up differently across exchanges. This is a very short-lived variation as arbitrage traders immediately rush to exploit these gaps. It’s quite simple; actually, these traders will look for trading pairs that are selling at a lower price on an exchange, buy them, and sell them on an exchange where they’re valued at a higher price. So, if you have enough knowledge about crypto trading pairs, you can also become an arbitrage trader and earn some quick profit!
Conclusion
Crypto trading pairs are an essential part of the crypto-economic system; it is necessary to have knowledge about how these pairs work in order to make the right trades. But as we said earlier, you need to have a base cryptocurrency to make a trading pair with a quote currency. You should always opt for a highly reputable and trusted crypto-buying platform to get that base currency from, like Voltcoins. A premium crypto-buying platform that offers a variety of cryptocurrencies to buy from, including Bitcoin (BTC), LiteCoin (LTC), Ethereum (ETH), and Tether (USDT). These cryptocurrencies will help you make the right crypto trading pairs on every exchange there is! Voltcoins offers a fast KYC process and seamless transactions to provide you with a hassle-free experience! You can also choose to pay for your crypto in a variety of payment methods, including credit card payments, bank wire transfers, and even Interac. You can place your order with Voltcoins now and get started right away! So, if you’re looking to get into crypto trading and need to buy your desired crypto, Voltcoins is a perfect choice!