What are Bitcoins?
A Bitcoin is a cryptocurrency. A Cryptocurrency exchange or a Digital Currency Exchange (DCE) is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies.
So basically, A Bitcoin is some sort of online cash. You can use it for purchasing, selling and trading, but not all shops and platform accept it yet.
Each Bitcoin is simply like a computer file, stored in a digital wallet app on a personal computer or a mobile phone. People can send and receive Bitcoins or even a part of one through the digital wallet. Every made transaction on these wallets is recorded and stored in a list called The Blockchain.
A Blockchain is a distributed ledger, spread all across the global network. Each peer of the network holds a copy of the complete ledger. Just like an Excel spreadsheet works it rows and columns, the Blockchain works in blocks.
What is Bitcoin Trading?
The Forex market is the most massive and most liquid market. It involves various ways of financial trading. Bitcoin Trading is a new fascinating doorway to this big world. Now, Forex brokers and brokerage firms accept Bitcoins as a method of trading and exchanging. In order to start working in Forex Bitcoin Trading, you need to open a Forex Trader account with a broker who accepts Bitcoins. As mentioned before, because it’s relatively a newer method, not all brokers or platforms accept Bitcoins as of yet.
Benefits of Forex Bitcoin Trading
Being this new method of currency exchange and for it to become acceptable for use in the Forex Trading market, it’s bound to have a great deal of benefits.
One major advantage of trading forex with bitcoin is that there is no central bank to randomly change bitcoin valuations. Due to its decentralized nature. The bitcoin rates are absolutely free from geopolitical influence as well from macroeconomic issues. These issues may include country-specific inflation or interest rates.
Most forex brokers offer high leverage ranging up to 1:1000 for Bitcoin Trades. Professional traders can use this to their benefit. However, such high margins should also be approached with great caution as they also magnify the loss potential. So be careful while dealing with Bitcoins
Also, all Bitcoin transactions are digitally recorded on public networks without any involvement from banks or clearing agencies. Hence, there are usually no transaction costs involved in Bitcoin, even for global transfers. Brokers pass these benefits to the clients by not declaring any deposit or withdrawal fee for bitcoin transactions. This highly improves trade profits as well.
One can start with as little cash as possible like 25$ with some Forex Bitcoin Trading Platforms. A few Forex Trading firms even offer new members the same deposit amount as a promotion. Traders should take care to check that all brokers are appropriately regulated.
Most Forex Brokers and Brokerage Firms that accept Cryptocurrency are keeping brokerage costs very low to grab the attention of and attract the new Bitcoin Trading clients.
With Bitcoin Trading, you don’t need to show your bank account or credit card details to deposit or withdraw money. Especially when dealing with foreign brokers, this is a huge advantage in terms of cost and financial security.
Bitcoin Trading has annihilated global boundaries. Using Bitcoins, Any trader from anywhere can trade Forex through a broker based in the United Kingdom. Regulatory challenges may still be a concern, but if both traders and brokers are willing to transact, then all geographical boundaries are nothing to be afraid of.
Risks of Forex Bitcoin Trading
There are still a few cons in dealing with Bitcoins. These disadvantages may produce concern and make traders, brokers and other platforms afraid of or unwilling to use Bitcoins in trading.
Bitcoin Trading occurs on multiple exchanges, and exchange rates vary. Traders must ensure they comprehend which Bitcoin exchange rates Forex broker will be using.
While receiving bitcoin deposits from clients, almost all brokers instantly sell the bitcoins and hold the amount in U.S. dollars. Even if a trader does not take a Forex Trade position immediately after the deposit, he or she is still exposed to the bitcoin to U.S. dollar rate risk from deposit to withdrawal.
In the past, Bitcoin prices have shown high volatility. Due to the absence of regulations, volatility can be used by the unregulated brokers to their advantage and to a trader’s disadvantage.
One of the biggest risks is that the deposited Bitcoins are exposed to theft by hacking, even from the broker’s digital wallet. To cut down on this risk, look for brokers who have insurance protection against theft. High leverage is also very risky for newbie traders who may not understand the exposure.
Cryptocurrency is a class of its own and has its own valuation procedures. Forex Bitcoin Trading essentially introduces a new intermediate currency which can produce profit or loss in unexpected ways. In short, any money that is not locked down in a trader’s base currency is out of the question a risk that must be put into consideration.