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Digital Currency and Its Impact on Forex Market!

The Foreign Exchange or Forex is the biggest and most dynamic currency trading market in the world. The introduction of crypto currencies like Bitcoin has further added a new dimension to this liquid market.

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Digital Currency and Its Impact on Forex Market!

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  1. Digital Currency and Its Impact on Forex Market! The Foreign Exchange or Forex is the biggest and most dynamic currency trading market in the world. The introduction of crypto currencies like Bitcoin has further added a new dimension to this liquid market. Forex traders make a profit by exploiting the volatility in exchange rates. The more the variation with other currencies, the higher is the profit. With some traders now allowing digital currency for exchange trading, the forex market is looking to change for good. How Does Forex Work With Bitcoin? With an understanding of how forex works with digital currency, below Yee Kok Siong explains how Bitcoin trading will impact Forex's activities: Supply While foreign currency is regulated by specific central banks, an exponential algorithm controls the creation of the. This automated method decreases volatility and gives you an idea about how many Bitcoins will be created in all.

  2. Inflation Bitcoin is unaffected by monetary inflation as Bitcoin's algorithm limits mining once it reaches the upper limit of 21 million Bitcoins. On the other hand, foreign currencies are government regulated and hence, are not immune to monetary inflation. However, price-level inflation impacts both Bitcoin and Forex. Multiple factors including interest rates, nation's public debt, political stability, and economic health cause steep derivatives that result in foreign currency inflation. Demand A centralized currency is uniformly in demand but, Bitcoin's demand is determined by factors like public approval, emerging marketplace, and the public's trust in Bitcoin value. The increase in public approval together with emerging markets has expanded the popularity of Bitcoin. In spite of criticism by media, Bitcoin's demand continues to rise progressively. Volatility The volatility in Forex market is around 0.5% to 1% while volatility is around 5% to 15% for Bitcoin. For this reason, Bitcoin appeals to high-risk traders. Trading Platform

  3. Forex and Bitcoin can be traded over different exchange platforms. The main difference is the alternative currencies such as Litecoin and Dogecoin that are offered for trading. Forex platforms do not incorporate these crypto currencies but replace them with lesser known currencies. Bitcoin is yet to reach its potential as it has given rise to a risky trading market. Other than the market fluctuations, there are several advantages and disadvantages of trading Bitcoin in forex. Advantages Of Bit coin Trading Decentralized valuation: Since there is no central authority that can unpredictably change Bitcoin valuation, the Bitcoin is not influenced by free from geopolitical and country-specific macroeconomic issue. Low trading cost: In order to attract new Bitcoin traders, forex brokers offer very low brokerage costs. Global reach: Bitcoin transactions have abolished global borders. A trader living in USA can trade forex with Bitcoin through a broker living in the UK. Zero transaction cost: Each Bitcoin transaction is electronically entered on public networks. Since banks or clearing agencies are not involved, Bitcoin trading is free from transaction costs.

  4. Leverage: For Bitcoin trading, forex offers high leverage up to 1:1000. If approached sensibly, traders can benefit from the huge margins. Small deposit amount: New traders can start Bitcoin trading with just $25. Some forex trading firms offer a corresponding deposit amount to new members. Security: Bitcoin transactions don't require you to disclose your credit card or bank account details to withdraw or deposit money. This is a huge benefit with regard to financial security. Disadvantages Of Bitcoin Trading The exchange rates for Bitcoins vary on different exchanges. Traders should understand which exchange rates will the forex broker use. High leverage puts new traders to risks as they cannot comprehend the exposure. Bitcoin exhibits high volatility. Since there is no central authority, unregulated brokers use high volatility to their advantage and put traders to disadvantage. Deposited Bitcoins can be stolen from broker's digital wallet by hackers. To avoid this, traders should seek brokers who are insured against theft. The majority of brokers sell this coin as soon as they receive the coin deposits from customers. A trader is exposed to the rate risk of Bitcoin to U.S. dollar from deposit to withdrawal. Conclusion

  5. Cryptocurrencies like Bitcoin are becoming popular but there are several related risks. Dealing in decentralized currency offers several advantages and risks. If traders are willing to take these risks, digital currency trading can be a lucrative market. For more details, please visit here: https://yeekoksiong.wordpress.com/

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