As we are entering a new era in trading, Cryptocurrency is starting to get a lot of attention. It’s like a shiny new toy, one that promises to be more entertaining (or in this case, more profitable) than the old one.
Ever since March 2017, the price of the Bitcoin rose to $1,289.09 per unit – which is more than what is asked for an ounce of gold. And this is a lot, considering that only two years ago, its price was just $400.
However, like every trading system, it comes with both advantages and disadvantages. If you’re thinking of trading the Forex system with Bitcoins, you might want to know a few things beforehand.
The Pros of Trading with Bitcoin
One of the main reasons why so many people are attracted to Bitcoin and Cryptocurrency is that they haven’t been tied to any institution or financial government. Indeed, the value of this currency will fluctuate – but it won’t depend on any bank. This means that if the Great Depression were to happen again and the banks were to collapse, your investments would still be safe.
Furthermore, Bitcoin isn’t the type of currency whose value will be easily driven down. Since the maximum Bitcoin cap is 21 million units, you cannot increase the resources if the demand is higher. This scarcity is exactly what makes the Bitcoin valuable – pretty much like gold. The difference is that, unlike gold, you can easily transfer Bitcoins within minutes.
Bitcoin traders will remain anonymous, and they do not have a centralized system – which means it’s much more difficult to commit fraud than it is with Forex. The information is stored using blockchain technology, a system based on a distributed ledger. You can learn more about this if you open free demo trading account, where you can access the basics of being a trader.
Bitcoin Trade: The Risks
The risks of changing to Bitcoin are pretty obvious: this digital currency is very volatile, and at the same it has no legal protection. Plus, Bitcoin is a lot more fluctuating in value than Forex, and these changes can be a lot more sudden; it won’t be easy to predict them. It can be yay high – or nay low.
Plus, we have no certainty regarding the regulatory future of Cryptocurrency and Bitcoin; what if the government will intervene to limit the Bitcoin? Will they ever remove the cap, allowing inflation to happen? What if another Cryptocurrency appears and takes over? At this point, it’s not easy for us to answer either of those questions.
The Bottom Line
Should we or should we not trade Forex with Bitcoin, now that we know the pros and cons of it? The answer to that is very tricky, since no investor is the same. If you are willing to take the risk that an unregulated currency brings, then Bitcoin will bring some pretty neat returns.
Remember, however, that not everything is black and white, and that you need to hone your trading skills if you want good returns. In that aspect, you might want to set a virtual trading account where you’ll learn everything from the basics to pro-level trading.