Bitcoin and Forex: A Comparison
In terms of a learning curve for Bitcoin novices, there is no real difference between Bitcoin and Forex trading.
- Like Forex, The price of a Bitcoin is determined by supply and demand.
- And when the demand for Forex or Bitcoin increases, the price increases, and when demand falls, the price falls.
- There are only a limited number of Bitcoins in circulation, with new Bitcoins created at a predictable and decreasing rate. Although Forex has over 4 trillion dollars in Liquidity
- The demand for Bitcoins must follow this level of inflation to keep the price stable.
- Forex works on the fundamentals of Countries.
Because Bitcoin is still a relatively small market compared to existing models, the market price of Bitcoins may go up or down in response to relatively insignificant amounts of money. This means that, for the time being at least, the fluctuations in the price of a Bitcoin can be quite volatile, whereas FOREX is one of the largest markets in the world which you can trade 24 hours a day/5days a week.
One of the benefits of BTC is that every transaction, and each individual Bitcoin, is tagged and traceable; your money simply cannot disappear without a trace. As security researcher Dan Kaminsky puts it, “A pallet of $100 bills that disappears in Iraq is a socialized loss against everyone who holds dollars. A million dollars of lost Bitcoin carries its identity, at least as a traceable taint. This loss remains privatized, and it can be sued for, forever.”
However, as a new forex trading prospect, Bitcoin faces a number of distinct challenges. Being decentralized raises problems when it comes to applying regulatory rules on BTC forex trading.
Also there is the issue of certain regulators (e.g. China) imposing a general ban on the currency due to purported concerns over money laundering.