Crypto Investing vs. Currency Investing: What’s the Difference?

crypto-currency-investing

Are you interested in investing? Do you want to learn about the differences in various investment options? There are numerous investment variations out there. As a result, it can be a difficult task to determine which investment medium is best for you. When getting started (or even if you’re more experienced) you may be wondering about forex and cryptocurrencies as an investment medium.

One of the most popular investment trends at the moment is cryptocurrencies; namely, Bitcoin. With a lofty price point, Bitcoin has garnered a lot of attention from many investors. But a high price with a substantial increase in a small window of time doesn’t necessarily mean it’s the right investment option for everyone.

So is it better to opt for a forex investment fund? Or is Bitcoin and other cryptocurrencies a better investment? The answer is: it depends.
The best investment option will be based on your goals and what you want for your financial future.

But let’s take a closer look at how you can determine what to invest in by comparing forex with crypto.

Similarities Between Currency Investing and Cryptocurrencies

Forex (also known as Foreign Exchange) is the trading of international currencies. Being a forex trader entails you’ll be making currency conversions such as euros to dollars, yen to pounds, or any other supported currency trading. When buying and selling, you’re converting real government-backed currency (also known as fiat currency) within your account.

Comparably, crypto is also a form of currency. The details of buying and selling crypto are pretty much the same as forex investing. However, rather than buying fiat currencies, you’re purchasing digital currencies which are not supported by any government.

Calculations and trading platforms function in the same manner. As a matter of fact, certain cryptocurrency exchanges will also support trading your funds for other federal currencies, in conjunction with cryptocurrencies, utilizing the same device.

Differences Between Forex Investing and Cryptocurrencies

While the trading platforms used to power forex and cryptocurrencies appear similar and are both considered a form of money, what you’re purchasing is different in a few ways.

Crypto is a digital asset that can be utilized as a form of exchange as well as a possible store of value. The majority of them are forged on blockchain technology and are used as digital tokens. Cryptocurrency value is determined by the basic economic principle of supply and demand.

Fiat currencies, however, are assets that are government-backed and intended to be an exchange medium. The value of a forex investment comes from a fluctuation in price between currencies. More often than not, properly managed fiat currencies won’t diverge much outside of a fairly marginal range. Changes in a forex rate typically follow government or central bank activity, such as budgetary or financial changes in policy. However, forex rates are always vacillating, providing acute traders the opportunity to profit.

Trading forex or crypto actively are both fairly high-risk undertakings. But some fiat currencies might be more inclined to handle the test of time, as they’re supported by legal governing bodies rather than a base of active users. Certain cryptocurrencies might survive in the long term, but others are likely to disappear. Fiat currencies, however, will be around for the foreseeable future.

The Bottom Line

When debating between forex vs. crypto, it’s important to know that the right choice is dependent on a myriad of factors such as personal preference and your financial goals. Each asset functions differently and it’s the responsibility of each investor to do their due diligence for each currency and make the appropriate trading or investing choices for them.

However, if you decide that forex trading is more geared toward your aims and preferences – CWS Capital is here to help. With nearly a decade in business, we can assist you with getting more out of your portfolio. Be sure to contact us today for additional information.