Pros and Cons of Trading Forex with Bitcoins
As we are entering a new era in trading, Cryptocurrency, which you can learn about here, 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.
Crypto has taken over the world. Blockchain and cryptocurrency startups have gained a lot of visibility in recent years and they’re all the rage. The use of initial coin offerings (ICOs) as a funding source for startups has exceeded traditional venture funding, has leveled the playing field, and represents a valuable opportunity for entrepreneurs. A crowdsale can now be used by anyone, anywhere in the world, with an idea that people believe in. The concept is not limited to Bitcoin anymore. Altcoins (alternative cryptocurrencies) have grown in number to over 1,500 with great potential for use beyond currency. Every day, some of these cryptocurrencies are added to the market. With the right crypto marketing services, these Altcoins can improve their reach and popularity as well!
However, 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. Thanks to automated Bitcoin trading platforms, like Bitcoin Profit, those who may not have as much experience as someone who has been trading for years can harness technology and use it to help them get the best returns for their investments possible.
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 practice and 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.