The Foreign Exchange market (Forex) is the world’s center for exchanging currencies. Traders gauge currencies’ health and attempt to exploit its volatility in exchange rates with other currencies to make a profit.  The more a currency varies, the bigger the profit (and risk).Bitcoin trading is similar to traders are essentially exchanging a cryptocurrency for another currency, which is the principle Forex is built on. Since Bitcoin is more volatile and its influential price-driving factors are different from Forex.

Bitcoin is a digital currency created by the mysterious Satoshi Nakamoto. Similar to other currencies, bitcoin can be used to buy items locally and electronically As a new user, you can use Bitcoin without understanding all its technical details. The algorithm used in bitcoin is SHA-256d.

In this article, we will explore how bitcoin is in trading and what impact it is making on the other fiat currencies and the forex depending upon certain measures :

Supply

The regulation of the amount of foreign currency in circulation is under the specific central bank’s. Bitcoins at first were rapidly created and exponentially decreased production after “enough” Bitcoins were generated. While this computerized method is new and hard to comprehend for some, it is important to note that it decreases unpredictability as you already know how many Bitcoins will be produced in the short-term and long-term future.

Demand

One of the advantages of having a centralized currency is a uniform demand. Since the currency is controlled by the government, its economic application is not disputable. Bitcoin’s demand is determined through numerous factors including public adoption, marketplace emergence, and the public’s confidence in Bitcoin holding value. With the expansion of public adoption, the demand for bitcoins will also expand along with emerging marketplaces that accept Bitcoins, the prevalence of Bitcoin will widen.

Volatility

The volatility of Forex is around 1% for the extreme foreign currency couples and 0.5% for less. In contrast, Bitcoin has a volatility of around 5% to 15% with a 10% volatility average.  For this sole reason, Bitcoin attracts high-risk traders.

Inflation

Many Bitcoin enthusiasts believe that Bitcoin is immune to inflation; this may be true for monetary inflation, but not for price-level inflation. The foreign currencies are government regulated since they can make fiat money in no time resulting in monetary inflation. Multiple factors that affect Forex include the involving a nation’s public debt, interest rates, political stability, and economic health. These factors cause steep derivatives; impacting foreign currency inflation. Since bitcoin is much quicker and easier to move and maintain, it is away from inflation.

Trading platforms

Both Forex and Bitcoin offers multiple trading platforms. The main difference between the two is the alternative currencies offered to trade with.  Bitcoin’s popular platform, Kraken, regularly trades with USD (United States Dollar) and EUR (European currency), along with alternative cryptocurrencies such as Litecoin and Dogecoin.  These cryptocurrencies are replaced with less well-known currencies but not integrated within Forex platforms.

While the long-term potential of Bitcoin is yet to be established, it has to be said that the cryptocurrency is predicted to go far when it comes to revolutionizing the way that we perform transactions online. This is by no means all that it should be limited to, though at the moment the main market in which Bitcoin has been integrated has been that of Bitcoin gambling and online casinos, In comparison to fiat currencies, Bitcoin allows individuals to take the power back from banks and the establishment as it is not regulated and has the potential to rebuild free market capitals. Along with this, Bitcoin is not affected by inflation as it is far quicker to move and harder to lose than fiat currencies. All of these factors are what leads certain people to believe that cryptocurrency is soon going to take over from fiat based currencies and completely transform the way that we view and use our money.

Conclusion :

• Bitcoin gives power back to individuals and takes it away from the banks.
• Bitcoin will rebuild free market capitalism
• Bitcoin is not affected by inflation
• Bitcoin is cheaper to send than fiat money
• Bitcoin money is harder to use than fiat money
• Easier to move bitcoin currency as opposed to with paper and money