Is Trading Cryptocurrency The Same As Trading Forex?Aug 12, 2022, 11:04PM
Crypto is the new kid in the investing world, Forex is the old reliable market. Read on to learn how to choose between them.
Cryptocurrency has been the craze in the investment world for some years now, even picking up serious institutional backing. But it has probably seen the most amount of interest in those that trade forex, as they are used to the complexities of currency trading and how economic factors can have an effect on coinage. Trading cryptocurrency is not quite the same, but the key differences are worth taking a look at when deciding whether or not to invest in one of these new currencies.
The first thing to note is that there are many different types of cryptos, with each having its own unique characteristics and use-cases, as well as having its own specific set of investors. This makes it hard for any investor to know which one to choose. As such, we will be going over the best ones available today- the top coins, tokens, and exchanges. We will also go into what is best to do in terms of investing in them and also what they all have in common. Finally, we will discuss where you need to look if you want to get started so you don't waste your time and money.
Top coins to keep an eye on:
There are quite a few coins out there, and each has different uses and benefits. Some of these coins have been around for longer than others, so it's always good to check the latest developments before making your final decision. The following is a list of the most popular crypto coins available today. I'll start off by going through what all the different coin types have in common and then go on to discuss the differences between them. I'll try to keep this as short and sweet as possible. Let's begin!
1- Bitcoin (BTC)
This is arguably the most well-known cryptocurrency of all time. It's also one of the easiest to understand and the one to invest in. You can buy, sell and store it in just about any wallet you like, using either fiat or cryptocurrencies. There have been a number of attempts to create blockchains and applications around this, but this seems to be one that has gained the most traction, as it's a widely accepted form of payment. They also seem to be the most secure, with all transactions taking place on a distributed ledger. That means if someone wants to steal your funds, they will need access to your computer or phone to steal your private keys and take control. However, this doesn't mean you are at risk. All your funds are safe, and in fact, if you lose access to a coin's keys, it'll still be able to pay out. So it's a pretty solid investment!
It's another fairly new coin with an interesting story behind its creation. LTC was created in 2011 by Charlie Lee. He wanted to develop a better version of bitcoin, the original cryptocurrency. While the name might not mean much to some people, you might find that it's quite an apt description. In a nutshell, LTC is designed specifically for transaction fees. Unlike other coins, this one costs more to send, making it a very attractive option for traders. Not only does the cost of sending a transaction make sense for them, but the end user can also see that he or she is paying less than he or she would be paying for something else.
Litecoin can also be stored in several different wallets and exchanges, allowing users to receive payments from anywhere in the world. With no central authority controlling the network, it has no regulatory issues and there are no issues with double-spending.
3- Dash (DASH)
Dash is an open-source peer-to-peer cryptocurrency. Its founder, Evan Duffield, was inspired by his love of decentralisation and after creating LTC, decided to create a similar coin. DASH is the result. A simple concept, but one that could potentially revolutionize a lot of industries. Just as in the case of LTC, a lot of coins are being developed around this, including BCH, which could potentially be the future of the internet. One thing to note, though, is that Dash has a bit more volatility than other currencies, so make sure you have the right amount in your account.
4- Monero (XMR)
Monero is designed to be anonymous and untraceable. What this means is that the transactions are not recorded on a public ledger, meaning anyone can send funds to another person without you knowing. Because of this, Monero is very popular amongst privacy-focused individuals, and it's very difficult for law enforcement agencies to track down who is sending money to whom, even with the help of big data analytics. This makes Monero extremely hard to trace and difficult to hack.
Back to Forex, now as you can see, the currencies traded with Crypto have some pretty interesting differences to the Fiat currencies traded with Forex, but does that mean Crypto is better? Not necessarily.
Crypto Versus forex
The biggest difference is the lack of regulation. Ever since Cryptocurrencies were invented, there was a general lack of regulations and oversight on how they are used. As such, the market has grown rapidly, which has made it easier for fraudsters to operate in. Regulations in countries like Japan and China are trying to crack this problem, but so far this hasn't worked as planned.
In conclusion, Crypto is arguably riskier and, in the long run, less rewarding. Forex is more of a safer way to improve the diversity of your investment portfolio and will likely continue to keep that status for a long time as traders continue to use it as a reliable hedge against market downturns and volatility while pulling in a consistent profit stream. You could always utilize both trading methods for a dynamic and diverse investment portfolio. Just make sure to always do your due diligence before investing; good luck!
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.