Some traders have started using Bitcoin as a payment method for trading currency markets like Forex. Bitcoin is seen as the most advantageous option because it has no transaction fees and low-cost transactions. With such benefits, Bitcoin has been gaining popularity in this genre, but the use of this crypto-currency is not without its drawbacks. Traders must understand the advantages and disadvantages of the coin before trading.
Bitcoin possesses several advantages when it comes to trading currency markets like Forex. Those who use this crypto-currency to trade Forex can do so without paying commissions or fees instead of other payment methods like wire transfers or credit cards.
Benefits You Can Have
Anonymity helps in trading:
Bitcoin is an anonymous crypto-currency with no identities attached, unlike bank transfers or credit cards which require users to be registered to make payments. To ensure that transactions are done in a way that keeps the recipient’s identity confidential, all exchanges occur over decentralized networks where there can be no single point of failure that can compromise the exchange.
Removes banking fees for online trading:
Traders can use Bitcoin to trade Forex without paying any commission charges, unlike other means of payment like bank transfers or credit cards. Using this means of payment, traders can reduce carrying out transactions.
Works even during bank holidays:
In case a trader is unable to get access to his account during bank holidays as a result of heavy traffic or otherwise, they will not have any problems with this crypto-currency because it always works 24 hours and seven days a week, even on bank holidays and weekends since there are no intermediaries that can stop the transaction from reaching its destination.
Bitcoin uses cryptography to ensure that every transaction is securely encrypted and compromised. On the other hand, their intermediaries can compromise all money transfers via banks or credit cards. So if a trading platform or the bank which handles transactions experiences downtime, you cannot make any transactions.
Bitcoin enables users to receive the funds they have sent to a receiver within a few minutes once it reaches the network and other nodes verify it, unlike banks that take several hours to confirm your transaction, thus undermining its reliability and promptness.
No clearing time:
There is no clearing time for Forex transactions, which means that you can start trading with your Bitcoin funds immediately with the Immediate Profit. Furthermore, Bitcoin is better than the banking system because it does not impose any restrictions on currency trading. This means traders can use this crypto-currency for trading Forex at any time of the day and at any time of the year since it does not require them to have a forex account in their local banks.
Drawbacks Of Trading Forex Using Bitcoin
Sharp fluctuations have hit the crypto-currency in the global market due to factors like other cryptocurrencies like Ethereum and Ripple that are more attractive to investors and traders.
Bitcoin is only available in a few countries, which involves many complications for its traders. They will have to convert them into local currencies before sending them over for trading purposes. Many countries worldwide have tried banning this crypto-currency because of its speculative nature, threats to their local economies, money laundering, among other reasons.
Because most exchange platforms operate using Bitcoin, any attack on such platforms can compromise the security of traders who are using this crypto-currency. Unfortunately, Bitcoin does not have an adequate infrastructure to support such attacks, meaning traders will have to rely on their exchange platform to secure their funds.
It isn’t easy to establish the price of Bitcoin because it is a virtual currency that is traded by unregulated exchanges and systems where anyone can post any value they want even if it is not valid. This has made Bitcoin prone to market manipulation by various stakeholders involved in this ecosystem.
High risks associated with Bitcoin:
Forex traders who use this crypto-currency are exposed to several risks that they will not experience with other means of payment like bank transfers or credit cards. The high volatility rate of the coin makes it difficult for them to predict its value at any particular time. Additionally, there is always a risk that government agencies may ban or restrict its use in different countries.
Traders rely on the exchange platform they are using for trading purposes. Still, most of the crypto-currency platforms worldwide are centralized and vulnerable to attacks because they have not invested enough in securing their infrastructure and servers against such threats.