With its value recently surpassing that of an ounce of gold, closing at $1,268 per coin on March 2nd to gold’s $1,233, it was perhaps inevitable that Bitcoin would eventually join the foreign exchange market. But does the cryptocurrency’s rise to global stardom have parallels in forex or is trading in the currency still something of a pipedream?
Bitcoin’s ascendency has been rapid but never assured. Approaching its tenth year of existence, the cryptocurrency is the brainchild of mysterious inventor Satoshi Nakamoto, an entity that vanished in 2010 and, despite numerous claims to his identity, doesn’t seem to have resurfaced. In 2017, Bitcoin is accepted in places as varied as Microsoft and cafés in London but it (arguably) wouldn’t be where it is today without early support from the casino niche.
As far as forex trading is concerned, Bitcoin has potential in trading, albeit as something of a novelty at present; it offers several advantages over fiat tokens but the need to convert from the cryptocurrency to dollars (for example) at some brokerages nevertheless adds an extra step in the trading chain. It’s also far from a well-supported option. For instance, forexbonus.com.au, a website that collates forex offers and rebates and has an exclusive array of offers for Australian traders, doesn't list any Bitcoin-accepting sites.
However, the salient point is that Bitcoin, over other cryptocurrencies like Litecoin, is still a viable option for currency trading and a potentially cheaper one.
Perhaps the most notable perk associated with trading in Bitcoin is the fact that it is decentralized, a trait that means the cryptocurrency has no association with banks or similar financial institutions. Consequently, its value isn’t influenced by inflation rates, political strife (Bitcoin usually gains during periods of unrest, such as after Brexit and in the recent crisis in Venezuela), and it is ring-fenced from bank bailouts and other financial ills.
Low transaction fees are another plus of Bitcoin trading. As the cryptocurrency’s records are managed and verified by the public, banks cannot levy charges on coins moved around. This particular perk is endemic to all transactions involving the cryptocurrency – or should be; the increasing size of the Bitcoin network has given rise to transaction fees. However, they’re almost universally significantly lower than the ones for major fiat currencies.
Bitcoin also allows forex traders to operate pseudo-anonymously, which is a peculiar quirk of the technology behind it – blockchain. While it is possible to hunt an individual down on the blockchain, it usually requires information from a number of sources. With that in mind, a regular Joe is as good as invisible. The main advantage of blockchain’s anonymity is not so much hiding transactions as being able to keep names and addresses secret; users simply send money to a Bitcoin address.
Finally, Bitcoin’s volatility has long been one of its major drawbacks. However, with increasing adoption throughout the world, peaks and troughs are less severe and the overall price has been stabilizing. In fact, Bitcoin’s value has been trending upwards since January 2015, adding almost 450% to its per-coin price since then. It’s still very much the choice of the more experimental forex trader but Bitcoin is worth keeping an eye on over the next few months and years.
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