Is Cryptocurrency or Forex the best investment?
There are many people who believe that cryptocurrencies like bitcoin will be the future of money. Forex investors, on the other hand, believe in trading fiat currencies for profit.
But which is better and more profitable: investing in Cryptocurrency or Forex?
In this blog post, we compare these two investment vehicles so you can make a decision about which one to choose.
In addition to comparing them from an investment point-of-view (comparing profitability), we also look at them from an ideological point-of-view as well (which has greater potential).
We’ll explore how these ideologies have evolved since their inception over time and why they may differ between countries around the world.
But first a little overview of Cryptocurrency vs Forex.
What is Cryptocurrency?
Cryptocurrency is a digital currency that uses cryptography for security and anti-counterfeiting measures.
The first cryptocurrency, Bitcoin, was created in 2009.
Cryptocurrencies work without the need of any central authority or banks to track transactions between people who want to trade coins online; managing transaction data through blockchain technology.
Blockchain originally came from bitcoin blocks which are used as public ledger for all transactions made on it’s network (a block chain).
There are now over 4,000 cryptocurrencies available on the market today with new ones being introduced daily!
Cryptocurrencies are created by private individuals, groups or firms.
Cryptocurrencies are making waves in the financial market, and it’s no surprise that a growing number of businesses want to start accepting them.
As part of this trend, some companies have begun offering crypto-friendly services like bitcoin ATMs or payment processing for merchants who don’t use Bitcoin yet but would still prefer not to deal with cash from customers.
The world is moving towards digitalization because even our currency has gone electronic; cryptocurrencies will be just as common someday soon.
Transactions in Cryptocurrencies are recorded and protected by cryptography and are made possible by blockchain technology, which also regulates its finite supply and ensures that it cannot be debased.
What is Forex?
Forex, short for Foreign Exchange, is the market where currencies are traded.
It has been around since 1973 when foreign currencies were allowed to be exchanged by private individuals.
It could also be called FX or FOREX; it’s all about currency trading in general (FX) so it doesn’t have to necessarily be foreign currencies.
You can trade any two different types of money – there are no limitations on what you can buy/sell in this marketplace because nearly every country has its own form of legal tender that they use as their national currency.
The most popular type of Forex accounts offered by online brokers will deal exclusively in US dollars vs euro, but other more well-known pairs include GBP vs USD and AUD vs NZD.
Forex is being regulated by the Commodity Futures Trading Commission and the National Futures Association.
Forex is an over-the-counter market, meaning trades can be made directly between a trader and his or her counterparty without requiring an intermediary like a broker.
This presents opportunities for both parties – Forex traders may buy at one price in order to sell at another higher price if they think that the currency will appreciate while their counterpart might execute this transaction as part of a broader trading strategy using leverage techniques such as short selling, futures transactions, options contracts, and foreign exchange swaps.
How Does Forex & Cryptocurrency Trading Compares
Currency Trading – Forex:
If one wanted to get involved in the world of Forex trading then they would need access to brokers who facilitate trades between currencies and exchanges where these brokerages create automated buy and sell prices.
In Forex trading, currencies trade against each other. One currency can be bought and sold with another type of currency, like USD vs EUR.
This is also a way to make money because if the value of one rises against the other, you will then gain profit from this price change when it’s time to sell your purchase back into whichever country’s national currency you came from.
Forex trading occurs when two parties agree on the price for one item being exchanged for another at some point in the future.
Forex traders buy currencies from one country with money from another country and sell them back again but this time making profit due to changes in exchange rates between those countries’ currency pairs; usually during economic crises like Brexit or trade wars such as US imposing tariffs on China imports worth $200 billion.
Forex trading is conducted over the ‘interbank market’, an online channel through which currencies are traded 24 hours a day, five days a week.
This marketplace can be accessed by traders from all around the world and it’s only limited to when your bank is open or closed for business!
While Cryptocurrency Trading:
You are able to trade cryptocurrencies on an exchange or via peer-to-peer (PTP) networks such as LocalBitcoins, which could make you a passive investor if you want that option available for your investment type.
Buying and selling cryptocurrency is done through Crypto exchanges.
Where buyers have to deposit money into the exchange in order to purchase an asset.
In some cases, a buyer has to transfer their existing cryptocurrency like Bitcoin or Ethereum onto that site before trading for other coins.
The idea behind Crypto trading is to buy low and sell high, or the opposite.
It’s a simple concept but can be very difficult to execute when things are volatile.
Unlike the Forex market, Cryptocurrency is a relatively new phenomenon, but its growth has been explosive. The digital assets that make up the cryptocurrency market are only going to grow in popularity and value as time goes on.
Nowadays there are many more crypto exchanges than Forex brokers – so it could be said that at present day FX is less popular than Crypto trading thanks to how much easier it is for people to get involved in buying and selling different cryptocurrencies without any great difficulty.
The cryptocurrency market is popular because it has the potential for long-term growth (unlike Forex).
It can be seen as a store of value and an asset with its own characteristics that are not possible in other markets, such as inflationary commodities the rates change.
What is the Difference Between Cryptocurrency and Forex?
The main difference between cryptocurrency and Forex is that cryptocurrencies are virtual currencies.
They can be traded online or through a digital wallet from anywhere in the world for other forms of currency.
On the other hand, Forex – It’s when you trade one country’s currency for another using an international broker.
Forex trades take place on exchanges where traders buy and sell at different prices based on supply and demand.
The difference in these two markets comes down to regulations:
Cryptocurrency trading has less regulation than Forex trading while still being more volatile in nature as it is not backed by any reserve bank like central banks have been known to do before with national currencies or gold reserves; whereas many governments regulate Forex transactions because they have a stake in the currency.
Cryptocurrency also has fewer fees than Forex transactions.
Because Cryptocurrency does not rely on banks or any institutions to process its transaction whereas forex trades are processed by financial institutions such as brokers and central banks which all take their cut of the profits.
The volatility and lack of regulation are two major downsides for cryptocurrencies, with some large swings being seen over short periods of time based on performance that can make it difficult to predict when an investment will turn profitable; while this kind of unpredictability makes cryptocurrency seem like more fun gambling than investing.
The lackadaisical regulation around crypto trading means anyone – including criminals – can get involved with no fear of repercussions from authorities but there’s a chance they could be outlawed before you get a chance to buy.
One advantage for Forex markets are that most countries have their own currency and central banks which provide stability in case anything should happen unexpectedly such as a natural disaster or other emergencies although these factors do not affect Bitcoin rates directly because its value does not rely on any central authority.
The cryptocurrency market has the advantage of not being a centralized system, but this is also its disadvantage because it can be susceptible to manipulation and fraud.
This decentralized aspect gives Bitcoin holders more control over their funds than Forex traders have with conventional currency.
Cryptocurrency vs Forex Investing: Which is Profitable Longterm?
Forex and crypto trading both carry risks, rewards, pros, and cons.
While forex offers benefits like stability in regulations it also lacks the high potential for increased return that cryptocurrency can offer.
The trading systems are similar in that they both use electronic and online transactions to buy, sell or trade currencies.
As mentioned, all you need is access to the internet for an account with a reputable broker such as eToro who will allow users of their platform to exchange different cryptocurrencies at ease without any hassle.
The forex market is known for having a high level of liquidity which allows traders to make quick, smooth trades. Crypto markets are largely unpredictable and have much higher volatility levels than the Forex Market does.
The different trading strategies that must be used in these two wildly varying financial systems makes them vastly dissimilar from one another but still affect each other greatly when it comes to what can happen with their values at any given moment on any given day or year
The thing is:
The pattern and behavior of both Forex and Crypto market is entirely different.
Forex traders have long been the ones to profit from investments in foreign currencies, but now that cryptocurrency has become a booming market many investors are turning their attention there.
This is because with new technologies and more transparency than ever before on forex markets due to regulations like Know Your Customer (KYC) laws being put into place by financial institutions people can feel safer trading cryptocurrencies using these platforms rather than going through sketchier middlemen.
A lot of Forex traders have been moving to the cryptocurrency markets due to its recent rise in popularity.
To decide whether to trade Forex or Cryptocurrency, you need to weigh how many resources and risks you can take.
Cryptocurrency price cannot be affected by things outside its market (i.e., other markets or people’s opinions) because it has no connection with any real-world assets like stocks, precious metals, etc.; thus making cryptocurrencies immune to inflation and deflation concerns.
Therefore in my opnion: cryptocurrencies are safer than Forex for investment purposes but require more research before investing in them due to their volatile nature.
Other Things to Know About Cryptocurrency vs Forex
The exchange rates fluctuate based on the supply and demand of each currency in which a trader is trading.
Forex traders have to continuously monitor their trades as well as the national, political, and economic happenings that could affect currencies’ prices.
Crypto transactions are permanent which means that once made, they cannot be reversed or counterfeited.
Crypto also has faster transaction speeds than a bank transfer (usually minutes).
The risk of fraud on Cryptocurrency is low as it’s not necessary to share any personal information in order to make transactions.
Forex traders need to understand that they do not own any underlying assets: their only interest lies in predicting what will happen next for one particular pair against another (e.g., USD/JPY).
Traders who want more stability should consider trading Forex rather than cryptocurrency.
Cryptocurrencies are valuable because of their scarcity while Forex can be printed without limit.
The value of cryptocurrency will vary based on the supply that enters the market, whereas the value of Forex does not depend on how much is produced or imported into a country but rather its demand in relation to other currencies.
If you’ve been paying attention to the news lately, you might have heard of some people talking about how they made a ton of money trading cryptocurrency.
And while I can’t talk specifically about those claims (because I’m not qualified), I do want to give my thoughts on Forex vs crypto as an investor and entrepreneur myself.
As someone who’s both invested in cryptocurrencies and traded currencies for years now, what I’ve found is that there are many similarities between these two markets but also major differences too.
Cryptocurrency investment might be a better and more profitable option than investing in the Forex market.
But Forex market can offer more built-in stability than Crypto.
Investing and holding coins for long time periods, when possible with enough capital, will also maximize your profits from an already volatile sector.
The increased volatility brings greater chances of success because it means there are opportunities to buy low and sell high as well as a hedge against other markets or currencies fluctuations.
Cryptocurrency has shown growth exponentially over the last few years while Forex has shown some stagnation due to the economic crisis.
On top of these benefits, cryptocurrencies can provide safe havens during times where access to other investments may be limited by geopolitical events such as natural disasters or war which only reaffirms their importance on people’s lives nowadays.