When you trade Forex, you usually buy and sell popular currency pairs for profit. For this reason, Forex is one of the most popular trading platforms, and the forex market is responsible for over 6.6 trillion daily transactions as of 2019. This popularity is what makes the Forex Market the most liquid and largest market in the world. That said, have you heard of cryptocurrency? In a literal sense, if Forex trades real-world/physical currencies like USD/CAD… etc. Cryptocurrency is completely digital and also responsible for billion-dollar transactions. What is Crypto?
Cryptocurrency
What is Crypto? Cryptocurrencies are digital currencies that are stored on a blockchain or digital database. All transactions are recorded on the Blockchain in a cryptographically secure manner. The goal is for consumers to have complete trust in the Blockchain, allowing them to transfer funds without the need for any third-party involvement safely. A cryptocurrency is a form of currency that has been developed to exist digitally on the internet. It enables anonymous, instant payments to anyone anywhere globally and does not involve any central authority. It functions as a form of digital money that traders can use for transactions. It uses peer-to-peer technology to manage the creation and transfer of money without any central authority. Bitcoins are usually the cryptocurrency sold to others in exchange for fiat currencies like USD. The term cryptocurrency came into existence in 2009 and is based on an open specification for decentralized digital assets. Since its inception, it has evolved to become an umbrella term referring to an increasingly diverse variety of decentralized systems and networks that utilize cryptocurrency as a means of exchange.
So, how does cryptography work? All crypto transactions are recorded on the blockchain, which is a decentralized public ledger. It is constantly expanding as fresh recordings are added to ‘finished’ blocks. Cryptography is used to add blocks to the blockchain in a linear, chronological order. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically upon joining the cryptocurrency network. No one can modify or control the information on the blockchain since it is decentralized. This aids with the security of your transaction and ensures that it is recorded accurately. Thousands of people update it on the network simultaneously, making it difficult to counterfeit. With so many ways to send a digital payment across the globe, it makes sense that someone should come up with a secure way to move money. While early attempts to do this were unreliable, blockchain technology has been reborn and is poised to become one of the most important new technologies since the internet itself.
When you trade Forex, it’s purely trading currencies and it has more regulated/secure markets than crypto; although crypto is widely used as a payment for goods and services. Crypto, specifically Bitcoins, are known to be the common method of payment in illegal activities because of anonymity. Another disadvantage of crypto is that, as of right now, it’s sporadic to see Forex accepting cryptocurrencies as legitimate currency. Some Forex Brokers don’t recognize crypto, but when they include cryptocurrency like Bitcoin into their platform, it’s implausible that traders use them more than trade into existing Bitcoin exchanges.