Which Is More Profitable,Fforex Trading Or Cryptocurrency Trading? - Many people are starting to learn about alternative investment vehicles other than stocks, such as forex and cryptocurrencies.
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However, each investment product has its own strengths and weaknesses, so potential investors and traders need to know which product is right for them and how to purchase it.
If the previous post explained the difference between stock and forex trading, stocks and cryptocurrencies, now is the time to learn the difference between forex and cryptocurrency trading. Foreign exchange and cryptocurrency trading are both commercial currencies and are regulated by the Commodity Futures Trading Regulatory Authority (BAPPEBTI).
Both have important differences that every trader interested in entering this market should be aware of.
What is the difference between forex and cryptocurrency trading and here is the explanation.
Learn About Forex Trading
Forex trading is the buying and selling of the legal tender (currency) officially used by a country. There are currently about 164 legal tender currencies in circulation around the world. For example, buy and sell between rupees (IDR) and US dollars (USD) or between Japanese yen and Chinese yuan (RNB).
The demand for forex trading is increasing with the increase in international trade and travel. In the past, trading in these commodities was only for the needs of money changers, but now we have the technology of forex trading based on the desire to make a profit.
Forex is the most traded commodity in the world. According to the central bank's triennial survey of the foreign exchange and over-the-counter derivatives market, daily forex trading volume was $6.6 trillion in 2019 (Investopedia).
Know cryptocurrency trading
Cryptocurrency is a virtual currency based on blockchain technology.
Thus cryptocurrency trading can be interpreted as the buying and selling of virtual currencies. There are currently more than 10,000 cryptocurrencies in circulation around the world. These include Bitcoin, Ethereum, Dogecoin, Ripple, and so on.
Cryptocurrency trading is becoming more important with the increasing popularity of blockchain technology and the metaverse. This is because cryptocurrencies, whether in the form of coins or tokens, are required for various gaming needs and transactions in the metaverse. Some countries even allow this digital asset to be used as a method for offline payments.
The difference between forex and cryptocurrency trading
1. Trading Currency
As explained above, the similarity between forex trading and cryptocurrency is that they are both trading in currencies. The difference is that forex trading is trading in fiat currencies while cryptocurrency trading is trading in virtual currencies.
So what is the difference between fiat currency and virtual currency? The difference is the fiat currency which is the official currency issued and regulated by a financial authority such as the Federal Reserve in the United States. Therefore, fiat currency can be used to buy and sell in every country.
On the other hand, virtual currencies like cryptocurrencies are currencies that only exist in the form of (usually intangible) digital assets. This currency is also issued by a private technology development company and is not controlled by a national monetary authority.
Therefore, many countries do not allow cryptocurrency to be used for offline buying and selling transactions. Cryptocurrencies are not legal tender to be used as a medium of exchange and a method of payment. In this country, cryptocurrencies are still considered digital assets and can only be bought and sold and cannot be used to pay for daily needs.
2. Basic Aspects
Since technical analysis mainly discusses how to discuss the history of an asset's price movements when estimating the future price of an asset, both forex trading and cryptocurrency trading are similar technical analyzes.
However, the two are very different in a fundamental aspect. The fundamental aspects of forex trading depend on the economic conditions of the country issuing the fiat currency being traded and general global economic conditions. This is because foreign exchange is issued, managed and regulated by the official monetary authority of the country. In other words, forex trading will not collapse unless the currency issuing country also collapses.
Unlike cryptocurrency trading. The fundamental aspects of cryptocurrency depend largely on three things: the blockchain technology offered, the developer profile and experience of cryptocurrency developers, and current and future usage. This is because the developer