There are more and more people going crazy over Bitcoin and also other altcoins. A good number of forex houses have opened their doors towards trading these cryptocurrencies.
In reality, cryptocurrencies are becoming popular for several reasons. Cryptocurrencies have offered an alternative to people especially how they can transact. It makes use of blockchain technology wherein it is a decentralized manner of confirming transactions. It makes use of miners in order to confirm transactions. And because of its decentralized manner, it really won’t go away.
There are cryptocurrencies such as Bitcoin that were traded at around $1,000 during the start of the year and even reached $20,000 during its peak this year. Should you consider trading cryptocurrencies on Forex? Here are some things that you want to consider.
You have to understand that cryptocurrencies are highly volatile. There are cryptocurrencies that have spiked in value by as much as 8,000% in this year alone. This could easily make an individual rich. However, since it is highly volatile, it may take some time before it can even be used as a currency.
Many cryptocurrencies to choose from
You also have to consider your options. There are many cryptocurrencies out there today. For now, Bitcoin remains the gold standard of virtual currencies. But of course, you have to know exactly your intention. Do you plan on making a quick cash from the next bullish trend? There are a lot of altcoins that you can consider to gamble. However, also keep in mind that you have to look at each cryptocurrency closely. For instance, there are cryptocurrencies that are easier to mine. On the other hand, there are cryptocurrencies that do have more coins than others.
Litecoin may have 84 million coins. On the other hand, you only have 21 million bitcoins. These are just some of the things that you will have to understand if you ever plan on diversifying on different cryptocurrencies.
Different laws on cryptocurrencies
A lot of countries have a lot of hesitations when it comes to the use of digital currencies. This means that there is always the possibility that you will have a harder time to liquidate your investment especially if it came from cryptocurrencies. You will have to understand the existing laws. Also, there are many updates being made that make it harder to liquidate your funds.
What are the things that make regulators worry? Since there is no regulatory body that is taking a closer look at virtual currencies, it is definitely Wild West as of the moment. It becomes prone to market manipulation and even insider trading.
If you are decided to trade cryptocurrencies with forex, you will have to think hard enough and consider all the pros and the cons. Be sure to take a hard look at the possibility of losing money. Bearish trends usually follow after a bullish trend. In fact, Bitcoin has even fluctuated by as much as 40% at one time. You will have to just stick to it if you really believe that in blockchain technology. However, just like in anything, you have to only invest what you are willing to lose.