Have you met people who tell you that trading digital currencies is no different than trading any other asset in the world? Perhaps, you think of forex trading when you talk about trading digital coins. Well, the truth is that all the trading in the world is the same at its core. Of course, you are trading, which means you give something to get something. However, there are certain aspects that make trading cryptocurrencies a completely different type of beast than trading forex currency pairs, commodities, assets, of indices.
The factors can be many but you should focus only on the ones that can help you decide which way to go. If you are struggling to decide whether you should go with crypto trading or some other format of trading, the information that’s coming further should definitely help.
The Asset Itself
The main and the biggest difference is the cryptocurrency itself. You are talking about an asset that is new and completely different from whatever you have ever seen in the financial markets to this day. Think about the evolution of currency. The world went from barter to coins, coins to paper, and paper to plastic. This time, the leap is in the digital direction i.e. your money is becoming digital in its truest sense. Cryptocurrencies don’t exist physically. They are not created like any other currencies in the world.
It’s not your government that creates a digital coin not is it your bank that backs its printing with something. Even the record of these currencies is kept distributed in a ledger that the world now knows as the blockchain. This technology is at the heart of crypto and it makes this asset different from whatever you have seen so far.
The Volatility Aspect
Volatility is not a new concept and there is no denying that. However, you have to agree that volatility was not as big of a concern as it is today for crypto traders. In any financial market, volatility can push the asset in any direction abruptly and significantly. However, when you talk about crypto trading, the term significant movement is an understatement. Do you know Bitcoin has gone up and down by more than 20% within a day? Imagine losing what you have by 20% within a day or gaining 20% on whatever you own within 24 hours. In either case, it is quite scary and attractive at the same time.
The volatility factor has made cryptocurrencies different from other assets out there. What’s more important to mention here is that this volatility can come from something as small as the regulation of one of the major digital currencies out of more than 7000 out there. You must not forget that it is a new market and even the most benign piece of news can swing the market in any direction.
The Future Value
It wouldn’t be wrong to say that many people want to trade digital coins because of their future value. In today’s world, you can download crypto trading software right now and start trading by spending less than $250. That’s because people now find value in digital currencies that they don’t find in any other asset. Other things might not seem as relevant in the future as cryptocurrencies. If you really want to know what the scope is for blockchain-based applications, software tools, and cryptocurrencies, you should take a deep dive into the concept of Metaverse.
Things might be about to change completely with the coming of Metaverse, especially after the fact that Facebook has change its name to that.
You can see that there are certain factors associated with this type of market that are not associated with other markets. If you are looking into future opportunities, you will definitely feel the need to exchange a few of your fiat bucks into digital coins. If you are successful at predicting things, you could completely turn your life around.