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The Similarities and Differences Between Bitcoin and Forex Trading

Traders Magazine Online News, February 1, 2018

David Webb

Ever since Bitcoin arrived at the trading scene a few years back, people have been overly eager in their attempts to compare it to virtually anything. Itís new, itís exciting, and itís something the Ďcommon folkí could easily dabble into without the government and the banks getting involved. The financial crisis of 2008 has made people wary of those and itís no wonder that so many have flocked to cryptocurrencies as a result. Yet, a lot of them are still skeptical about bitcoin, much like they were skeptical about forex trading in the 90s when they were calling it just another scam. Nowadays, we should know better than to judge something because itís different, as forex trading has turned into a free market paradise with five trillion dollars being traded every day, making it the most liquid market on the planet. Therefore, letís take a closer look at these two and discover just how similar or different they truly are.

Whatís Bitcoin?

Bitcoin is often considered to be the flagship of all cryptocurrencies out there, due to it being the most successful one so far. Even though thereís the word Ďcoiní in its name, just like any other digital currency it has no physical form and remains purely digital. Whatís unique about bitcoin is that it isnít linked to any central government or bank administration, making it the first decentralized digital currency on the planet. The way it works is through direct peer-to-peer transactions where the proof of these transactions is then stored on a public ledger that uses cryptography-based technology called blockchain. This means that its price is solely governed by the actual people trading it as well as the overall traded amount.

Whatís Forex Trading?

The foreign exchange, or forex for short, is based on the exchange of one fiat currency for another. For example, the two most common pairs exchanged are the USD and the EURO. The gist of it is that you want to be buying one of the currencies while its value is low, and at the same time be selling the other one while its value is high to earn a profit. The difference in value is rather small, usually a few pennies (usually called pips), which means you need to exchange extremely large sums of money in order for it to be made worthwhile. This is why finding a credible forex broker can be a real game changer, as leveraging money allows you to make much larger transactions and get better profit margins as a result. In addition, as forex trading is done online, these platforms are absolutely necessary for conducting and monitoring trade and will be your main tools in this regard.

The Similarities Between Them

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