The world is continuously changing, whether we want it or not – and this applies especially to the trading market. More and more people are switching to Cryptocurrency trading while the others hold their grounds and remain faithful to Forex. But what’s actually the difference between the two of them? Are there any legit reasons why more and more people are ditching Forex trading for Cryptocurrency?
Traditional Forex Trading
If you were to associate Forex and Cryptocurrency somehow, then you can probably compare it to the chicken and egg theory – in the sense that Cryptocurrency is the egg that came out of the chicken, which is Forex.
Forex is a rather stable way of trading, and it will take some time to hone your trading skills. You will need a lot of time, but also access to certain information if you want to gain actual profit.
Basically, Forex (or foreign exchange) is a market where you buy and sell actual currencies. You can say that it’s very similar to stock exchanging, where both parties trade their shares of a company. Why the similarity, you may ask? Well, that’s because just like with the stock market, that money does not automatically become yours.
However, you can benefit from the changing value based on the exchange rate of the currency. Because actually, the Forex exchange market is the one that sets the exchange rate – which is continuously floating.
Here’s an example: you decide to go for some time to Europe, and you change your dollars to Euros at a certain rate. By the time you come back, the exchange rate has changed, and when you turn the same amount of Euros back into dollars, you realize you got a bit more money out of it.
The same technique is applied by traders: the trader will buy a currency at the buying price and then sells is as another currency for the selling price. You can pretty much anticipate this change in rate, but at the same time it’s fairy risky. You can never know how the exchange rate will change. You can find more on the topic by checking some online trading webinars.
Cryptocurrency trading is not as fancy as Forex – and it pretty much represents our ascension in the modern era. Instead of working with actual currencies, you work with digital ones: the Bitcoin.
Individuals will buy Bitcoins, and will use them to buy services and products online. Each transaction will be recorded on the Blockchain, so the risk if fraud is smaller than with Forex.
However, using Bitcoins is still in its initial stage. An algorithm doesn’t allow or more than 21 million Bitcoins to exist, so by the time they will all be circulating, their value will also grow.
Both Forex and Bitcoin can earn you profit. The difference is that Bitcoin is a bit more volatile than Forex, and it also promises growth. If you find yourself wanting to know more about trading, you may want to try setting a virtual trading account, where you can hone your trading skills.