Crypto Investing
31 Oct 2020

Forex vs Bitcoin: The Basic Difference

CoinSwitch Kuber

Profit – is that not every investor’s dream? 

Suppose you research all the reliable options that will earn a good profit in a short period.

You will most likely end up standing at crossroads to choose from two major markets – Forex (fiat currencies like USD, EUR, INR, etc.) and Cryptocurrencies.

In terms of the investing process and trading, forex and cryptocurrency trading have many similarities.

Such as:

  • Both deal in currencies
  • Highly volatile
  • Rely on the latest technology

Forex vs Bitcoin: Everything That You Need To Know?

The Forex and Cryptocurrency markets are both lucrative. However, the critical difference remains in how each market responds to different developments. 

Let us check out how they are different and which is a better investment option that suits you!

What is Forex?

The forex market deals only in government-issued currencies. It plays a crucial role in the supply, demand, and price discovery of fiat currencies.

It can be affected by many economic factors, such as:

  • Macroeconomic statistics like inflation, GDP data, job data 
  • Change in interest rates
  • Trade numbers like the balance of payment, trade deficits, and surpluses
  • Political developments 

All these factors help drive the forex market and allow traders to profit from every price movement. If you want to trade in forex, you need to keep a close eye on the economic calendar and analyze every situation beforehand. 

The Forex Market operates worldwide, and the rates are applicable globally. It is primarily divided into three market sessions, Asian (Tokyo), European (London), and the US (New York) session. And functions 24 hours, five days a week (Monday to Friday), which makes it a fully decentralized marketplace but a fragmented one.

Though forex is known to be a highly liquid market, the price movements are relatively minimal. Hence, the volatility is much lower, which makes it challenging to earn huge profits. 

What is Bitcoin?

The economics of cryptocurrencies is radically different than our regular currency. It was built as a solution to the loopholes in our current financial system. 

A genius with the alias Satoshi Nakamoto introduced the first cryptocurrency called Bitcoin in 2009. Since then, it has gained significant prominence in the financial markets. 

Bitcoin is a form of digital cash, used as a medium of exchange and a vehicle of investment. It is decentralized and backed by blockchain technology.

If you are new to the concept of Bitcoins, you can learn more about it in KuberVerse -a crypto educational space dedicated to helping you learn more about investing in cryptocurrencies.

Buy Crypto With Just Rs.100

Bitcoin vs Forex: Know The Difference

Both fiat currencies (forex) and Bitcoin derive their value in a very different way. 

In the traditional monetary system, the fiat money in the system is created through debt (issuing loans).

For instance:

Whenever you take a loan, you have to repay it with interest. This, in turn, calls for printing more currency resulting in inflation. The effects of inflation on the economy is explained in this article

On the contrary, the Bitcoin supply is capped at 21 million coins, and its price is solely influenced by market supply and demand.

With the inflation rates rising continually, Bitcoin may become a real deflationary asset soon. And could be the most effective store of value globally, better even than gold.

Let’s have a comparative analysis of both the investment assets. 

Which is a Better Investment Option: Bitcoin vs Forex?

This is a pressing question in the minds of most investors who have heard about forex & cryptocurrencies.

However, the answer lies with you. You can choose to invest in either of the markets, depending on which economic condition suits you the best or maybe even both.

The forex market is a mature one with clear regulations and deeper penetration. If you seek stability, this is the right choice. However, the upside may not be that much.

On the other hand:

Bitcoin is known for its volatility with a higher risk-return trade-off but the other fact that it has returned a millionfold over the past ten years. Also, as an emerging asset class, it can continue to outperform all other traditional asset classes.

In short, whichever way you choose, the key is to educate yourself & KuberVerse be your go-to guide for effective planning, proper risk management, and making investments as per your goal.

FAQ on Forex vs Bitcoin:

1. Which is more profitable: Forex or Bitcoin?

Forex and Bitcoin both are two very different yet profitable markets. However, what is profitable for you varies based on which market conditions suit you.

The forex market is a more stable one with comparatively fewer profits while the Bitcoin market is a high risk – high reward market.

2. Are Forex and Bitcoin the same?

Forex and Bitcoin both are very different markets.

In the Forex market, the asset derives its value through debt. So to fulfil the money requirement, more money is printed, resulting in inflation.

On the other hand, Bitcoin is capped at 21million and derives its value from the economies of demand and supply. It is a deflationary asset. 

3. Can I trade Forex with Bitcoin?


Many forex traders do accept Bitcoins and other cryptocurrencies.

4. What are the pros and cons of Bitcoin vs Forex trading?

Some pros and cons of the forex trading include

Pros – Highly liquid

Cons – Centralized, multiple entry barriers, the trading window is a comparatively smaller and unlimited supply of currencies.

Some pros and cons of Bitcoin trading include

Pros – Decentralised, minimum entry barriers, scarce supply

Cons – Comparatively less liquid and highly volatile

5. Which one is safer in terms of investment Forex or Bitcoin trading?

Forex and Bitcoin trading are two different markets, and each has its risk factors.

After analysing your investment profile and studying both the markets, you can decide which market you would like to term as safer.

[su_note] KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing. [/su_note]

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.


CoinSwitch Kuber

Content Writer

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