Forex trading and crypto currency.

Today, we will be discussing something that might intrigue many of you future investors and traders. Though some might argue that comparing cryptocurrency trading with forex trading might be like comparing apples and oranges but you will see for yourself that that’s entirely the case. 

There are many differences, yes, but there are also plenty of similarities between the two types of trading and we are here to discuss them. 

Crypto trading, just like forex, involves trading currencies. However, the forex market is larger and well-established while the crypto market is relatively a new player to the scene. 

Forex involves middlemen, brokers and various other institutions that usually collect fees at almost every step of the trading process. However,in crypto trading, there’s no middleman and that’s probably the biggest draws to it. 

Another major difference we have to mention between the two is the liquidity available in forex and the lack of it in crypto, once you drift away from the major cryptocurrency coins. Security and other issues will also have to be talked about if you truly want to understand the differences between forex and crypto trading.

If you are wondering which type of trading to start with, this article might help you. We will take a quick look at both cryptocurrency trading and forex trading before comparing them on several fronts. Let’s get started. 

As mentioned,cryptocurrencies are a relatively new entry in the financial world. Compared to forex, it’s a much shorter period of time but that doesn’t really make it any less formidable in the trading field. Since the creation of Bitcoin back in 2009, crypto has been on the spot, though experiencing a sporadic rise and fall in its worth. In the span of ten years, however, despite rival currencies emerging and tons of scams, Bitcoin still remains a powerhouse in the crypto world. 

The role of cryptocurrencies as a digital asset is to stand as a decentralized medium for peer-to-peer transactions. Due to its nature and independence from central banks and governments, in recent years it has become an alternative source of funds and trading for many people. That’s a huge jump from the early days of cryptocurrency when it was mainly used in the black market. 

Up to date, there have been over 40 million crypto wallets created and over 1,600 cryptocurrencies in existence. With a steady growth rate since 2016, it’s safe to say that the crypto market has become quite popular with traders in recent years. 

In addition to the multi-coin wallets for digital assets, there are companies that have already enabled the use of crypto as a means to pay for services and products. This opens new opportunities to talk about crypto’s future liquidity and fiat-to-crypto (and vice versa) trades to enlarge in trading volumes. 

Bitcoin is definitely a cryptocurrency to keep an eye on. However, there are other good options to look out for if you want to invest or trade with cryptocurrencies. For example, check out LTC (Litecoin) for speedy transactions or Dash which guarantees near untraceable transactions. There are, of course, plenty more to check out. 

Ultimately, the currency you choose will depend on how you prefer to conduct your transactions so make sure you do your research beforehand. 

Let’s talk a little bit about the differences between investing in and trading cryptocurrencies. 

When people decide to invest in a cryptocurrency, usually that means that they are buying, let’s say, Bitcoin for the long term. They believe that the price will go up, regardless of other factors that may prevent that along the way. Those people believe in the technology and the idea behind the currency and want to invest in it with the hope of a future return of investment. 

Crypto traders, on the other hand, buy/sell Bitcoin (we are using Bitcoin, just as an example), in order to make a profit. Traders view cryptocurrencies as an instrument for making profits, unlike investors. Sometimes they may not even study the ideology or technology behind the product they are trading. Also, cryptocurrencies are very volatile. You can only make a profit if you manage to correctly anticipate what’s going to happen in the market. 

Because the cryptocurrency landscape is relatively new, there are not a lot of factors that can cause price changes. The fact that they have been designed as decentralised assets, free from any government/bank control, things like rate changes, political factors, data releases, etc. don’t quite affect them as much as fiat currencies and the forex trading market, consequently.