Both situations are dependent on global supply and demand metrics. This means higher demands will result in higher prices. Bitcoin’s price is not dependent on the international uncertainties created by the central bank, and Its price is connected to the cryptocurrency ecosystem. However, Forex fluctuations are tied to the national economy and its currencies. It is known that Bitcoin is not a real currency it is a digital one. It is also believed that this currency is not as dynamic as the other trading currencies. So while Bitcoin is a cryptocurrency, Forex is a platform to trade currencies like Dollars, Euros, as well as Bitcoins.
Another difference is the existence of over-the-counter (OTC) contracts in currency markets, which is not presented for Bitcoin. But Some of these contracts allow Bitcoin to trade in the margins. So far, we talked about two features that are different between Bitcoin and Forex, but the greatest difference is the matter of liquidity. Global currency trading is a $5 trillion market, it is way higher than Bitcoin’s market valued, in the billions. This liquidity will cause higher fluctuations and instability in Bitcoin.
So, we know that BTC is a decentralized platform. Forex is likewise considered as decentralized trading. But it doesn’t mean they are the same. Don’t mistakenly assume that Forex and Bitcoin are potentially equivalent because of this common feature. The currencies that are traded through Forex are supported by banks, even though the trades happen in a decentralized fashion. Recently a new come feature added to Forex in some countries is Blockchain. We further explain it.
Trading Bitcoin on Forex
Although deposit withdraw, and trade on Bitcoin-based account is possible in some Forex brokers, this function is accompanied by legal implications for Americans because the contracts for difference (CFDs) are not allowed there. Blockchain could be used in both, which provides them with higher security. Bitcoin’s history is more intricated with Blockchain. But recently, many countries including Japan are implementing Blockchain in their Forex tradings as well. Consequently, we are expecting a faster growth process of Forex trading over these countries.
Regarding this, Japan-based SBI Holdings announced by implementing Blockchain the operational risk of the conformation business will reduce. It also provides higher privacy protection as well as temper tamper resistance.
So while there are famous Exchanges, why should we use Forex?
We can conclude, for a while, until Forex comes up with more robust rules to regulate and offer Bitcoin, using Bitcoin-based exchanges is more logical and useful. In other words, using Bitcoin wallets are more suggested.
To sum up – We introduced Bitcoin and Forex. Presented some information about their differences. We explain some common features between Forex and Bitcoin as well as the positive implications of those features. Moreover we presented some reasons why it is recommended not to trade Bitcoin on Forex for a while and what better options of tradings are available.
OTC: Over the counter or off-exchange trading is done directly between two parties, without the supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges.
SBI: SBI Holdings, sometimes referred to as Strategic Business Innovator Group, is a financial services company group based in Tokyo, Japan.
CFD: In finance, a contract for difference is a contract between two parties, typically described as “buyer” and “seller”, stipulating that the buyer will pay to the seller the difference between the current value of an asset and its value at contract time.