A lot of beginner investors have trouble determining the difference between cryptocurrencies and fiat, and this leads many to believe that crypto markets and forex are roughly the same. While the two share some similarities, they are also vastly different, and one may be more suited for you than the other depending on what you’re looking for. You have to know what these differences are so you can adjust your strategy and have realistic hopes or expectations. Let’s take a look at some of the biggest differences between cryptocurrency and forex investing.
Cryptocurrencies Are More Volatile
The biggest difference between cryptocurrencies and forex is volatility. Crypto markets are known for being extremely volatile, which can be a benefit depending on your objectives. If you want to capitalize on wild price movements, for instance, then crypto would be a much better option. But if you feel comfortable grinding it out all day making safer trades with less potential returns, then forex might be a better option for you.
Cryptocurrencies have Different Functions
Another major difference between cryptocurrencies and traditional currencies is their function. All currencies have one principal goal, and that is to perform transactions. Cryptocurrencies, on the other hand, can be used to represent ownership in an asset and act like shares, power applications on various blockchains, or make payments in some cases.
Ether, for instance, is not meant simply for transactions but was made specifically to power decentralized applications on its network. This gives it an intrinsic value, unlike other coins that are mainly pushed by supply and demand like bitcoin. This could make the coin more interesting for someone interested in investing in crypto and wanting something with true value backing it. If you want to learn more about Ether and look at its price movement, OKX.com is a great resource to check out.
Cryptocurrencies Have Better Potential for Growth
No currency on the planet can replicate the price action bitcoin has had since its inception. We’ve seen fiat currencies collapse overnight, but we’ve never seen a coin, at least recently, shoot up in value like bitcoin or ether. This makes crypto a better option for short to mid-term investors who want a quick return on their money.
Cryptocurrencies Are a Bit Harder to Trade
There are more barriers to trading crypto than there are with forex. You will first need to get a cryptocurrency wallet which will store a copy of your public and private keys and you may have to buy an entry cryptocurrency before you can access more obscure coins. Signing up for certain exchanges can also be a bit more arduous at times. But, when you have everything in place, trading crypto is pretty much like trading any other kind of asset.
These are only some of the differences between cryptocurrency and forex investing. If one option interests you more than the other, take the time to learn its specificities more in-depth, and get as much practice as you can before you jump in.
