A Contract for Differences (CFD) is an arrangement that allows traders to trade the underlying asset without actually owning the asset. In other words, traders can speculate on an instrument’s price movements, anticipating a rise or fall on its price and take a speculative bet.
For example: If the trader thinks the Bitcoin’s price will rise against USD, he would place a Buy order – if it rises as expected, he can sell the Bitcoin CFD later for a higher price and profit from the ‘difference’.
Conversely, if the trader thinks the Bitcoin’s price is going to fall against the US Dollar, he would open a sell position – if the price goes down as expected, he must place an offsetting Buy order to exit the trade and book a profit.
Cryptocurrency CFDs are where the underlying asset of the CFD would be a Cryptocurrency like Bitcoin. Just like trading any other CFDs, you can trade & speculate on the price of Bitcoin against USD Dollar by using Bitcoin CFDs.
All this is done without physically exchanging your currency for BTC which is done in case of buying Bitcoin with an Exchange & storing them in digital wallets.
The main advantage of trading Bitcoin as a CFD, is that you don’t have to worry about the security of any wallet, and in most cases the trading fees with regulated Bitcoin CFD brokers is much lower compared to an exchange.
Although the negative side is that you won’t actually own bitcoin(s).
Moreover, remember that CFDs are complex financial products and are not intended for beginners, and you risk losing your invested capital. Even experienced traders lose, so you must invest wisely & with right knowledge of this asset.