The Forex Market or Digital Currency? Which is More Profitable?

One of these days’ questions of traders in financial markets is the Forex market or digital currency? Which is more profitable?

To answer this question and for you to make a better decision in trading in each of these markets, first you must be familiarized with the process and transactions in them. It is safe to say that before entering any financial market in the world, you must be properly educated about their way of conducting transactions, profits, losses, and the time to enter and exit the transaction. After having the necessary training and controlling your emotions and feelings, you can transact in any financial market you want.

To better understand the similarities and differences between the Forex and Digital Currency markets, first, we will describe the meaning and function of each one of them to you.

What is the Forex?

The currency market or the Forex market is derived from Foreign Exchange and it is also known as FX. This is one of the largest trading markets in the world. At first, the currency market was only to trade currency pairs between two different countries, and with the increase or decrease of each currency rate, the traders would make a profit or loss. After that and until now, the currency market has become a platform for trading types of rare metals, digital currency, all kinds of stock, and even oil. The currency market is an Over-the-Counter (OTC) market and no governmental or non-governmental organizations are supervising it.
Because of making financially-large transactions. The market’s currency liquidity is very high and there are trillions of dollars are being traded daily in this market.

The transactions in the currency market are conducted online, through electronic applications, and from a long distance at any hour during the day and night; so unlike stock, there is no fixed location to visit. These transactions are conducted directly between the buyer and the seller or through brokers. The Forex brokers are in fact middlemen between the buyer and the seller. Forex is a financial platform for transactions that are made in banks, exchange offices, investors from various organizations, and traders. As we mentioned earlier, there are no governmental supervisions in the currency market, but there are regulators who are responsible for supervising the work of brokers.

Forex, one of the world’s oldest financial markets, maintains the stability of international financial liquidity. The under-trading currency pairs’ rate in the currency market is used as a reference for all the currency trading throughout the world and in fact, the fall or rise of a currency pair in this market has the same effect all over the world.

Now that you have been generally familiarized with the Forex market, it is time to understand the digital currency market, also known as Crypto. In our next step, we will introduce you to the digital currency market.

What is Digital Currency?

Digital currency or digital money is the money that is made and used in a virtual and digital platform. Digital money is a replacement for the common currencies in every country and over the last 15 years they have been recognized and gained a lot of popularity amongst people. Therefore, the entering of digital currency into the economic cycle of a country has an effect on working with money, rapid performance, elimination of paper currencies, and the unification of the world economy. Some people confuse digital currency with cryptocurrency. In this case, you should know that cryptocurrency has some differences compared to digital currency.

 What is Crypto?

Crypto is derived from Cryptocurrency and its literal meaning in Persian is “Ramz Arz”. In the digital currency market, virtual and digital currencies are traded, and both are made in a virtual and digital platform. Therefore, Crypto or cryptocurrency is one of the digital currencies whose process of making is different from other digital currencies and is through encryption, or cryptography.
So, the digital currency market is an enormous financial market made of digital currencies, and one of its subsets is cryptocurrency. Cryptocurrencies are made by encryption methods and have high security. In addition, the review and recording of the transactions in cryptocurrencies are decentralized and no governmental organization has supervision or involvement in it. Other digital currencies such as the virtual currency of the central bank, are subsets of the digital currencies.
In this part, we provide you with a brief explanation of digital currency, the central bank digital currency, cryptocurrency, and virtual currency to help you reach a better understanding of them.

• Digital Currency: A kind of money that is transferable through an electronic platform and computer network.
• Central Bank Digital Currency: A type of digital currency that is issued by the central bank of the country. therefore, the central bank of each country digitally issues the common currency of its own country. For example, the Central Bank of China issues digital Yuan.
• Cryptocurrency: Cryptocurrencies are a type of digital currency that have been created since 2009. Making and transferring cryptocurrency is determined and overseen by specific encrypted algorithms. Cryptocurrency is created and transferred in a decentralized way and with no dependency on banks or specific countries. Some forms of these cryptocurrencies are Bitcoin, Ethereum, etc.
• Virtual Currency: The term “Virtual Currency” was first introduced in 2012 by the European Central Bank (ECB). Virtual currency is a way of payment between the members of a certain association that trade virtually and through a private network.

To say in general, all of the mentioned currencies are subsets of digital currencies.
Also, digital currencies are subsets of the global currency market that transactions conduct in its platform. Therefore, you’ve been familiarized with Forex and Crypto markets. Now, it is time to describe the features and benefits of trading in each of these financial platforms.

The Features of the Forex Market:

The Forex market –Which is one of the world’s largest transaction markets and trillions of dollars are being traded daily on its platform– has some unique features for itself. In the part below we inspect these unique features.

• The rules in the currency market are few and simple. This means that there aren’t any weird rules and unreasonable strictness towards traders.
• No governmental or non-governmental organizations have supervision on the functionality and the transactions of currency markets.
• They are not connected to any specific country or government.
• Fees and commissions in the currency market are very low compared to other financial markets.
• There are no time restrictions in the currency market and from Monday at 10 PM Sydney time until Friday at 10 PM New York time, the dealers can make their trades 24 hours a day.
• The transactions are conducted online on an electronic network platform and so there are no locational restrictions for these people. The deal can be made with only an electronic device such as a laptop or mobile phone with an internet connection.
• Due to the high liquidity in the currency market, there is the possibility of entering or exiting a transaction at any time.
• With a currency pair, in any case (increase or decrease) there is the possibility of making a profit for the traders.
• It’s a platform and a place for making trades in a fast and easy way. Also, it’s a flexible area for making trades at any time, place, or with any amount of funds.
• There is no need for paying taxes, fees, and interests to make transactions.
• There are a lot of opportunities for buying and selling the currency pairs in the currency market.
• Profiting multiple times compared to the initial fund can be achieved by using leverage coefficients.
• Because the currency market is an international financial platform, economic, political, and social events and news in any country can affect the rate of rise or fall of a currency pair.
• Running various Forex strategies is possible by using analytical methods.
• A demo account is there for conducting a transaction on a trial basis.

The Forex market has some unique features to attract its audience internationally. It’s because of this that trillions of dollars are being traded at any hour of day and night from Monday at 10 PM Sydney time until Friday at 10 PM New York time.

The Features of the Digital Currency:

The digital currency market –And crypto which is a subset of the Forex market– has some unique features that are mentioned below.

• Numerous symbols are used in the digital currency market and the number of these symbols and digital currencies grows with each passing day.
• Liquidity and the number of transactions in the digital market are low compared to the other financial markets because the platform of the digital currency is very new.
• Buying and selling the digital currency is conducted directly, with no middleman, and no supervision from any governmental organizations.
• There are digital and hardware wallets for maintaining the purchased currencies for a long or even a short period.
• The daily increasing expansion of digital currencies throughout the world has caused trading in the real world and at an international level.
• Makes large and worthy trading easier because there is no sign of transferring paper money in huge sums of money.
• It’s one of the newest and safest platforms for investment.
• Trading on an international scale is available 24 hours a day and does not include any
  off-days.
• With cryptocurrencies, the countries that are under embargo can conduct transactions worldwide without being identified.
• Some transactions by using crypto –Because of its complex structure–, the trade will be conducted with high security and without any fraud and scam.
• Because of the long information of cryptocurrencies, if one of the entering information is wrong, the structure of the cryptocurrency will completely change. Therefore, the transaction will not be repeated.
• Due to the unknown identity of the buyer and the seller, tracing the selling and purchases is not available worldwide.
• The addition of Metaverse to the world of digital currency is one of the unique and very new benefits of digital market platforms.

The Comparison Between the Forex and the Digital Currency Markets:

Now that you’ve been familiarized with the Forex and the digital currency markets, a comparison between these two financial markets seems possible. As you understand by now, there are some similarities and differences between the currency market and the digital currency market.

Transacting in the currency market is buying and selling one currency for another in the hope of an increase in the value of the bought currency. Therefore, in this transaction, this is the difference between the price of currencies that causes the traders to make a profit while transacting in the digital currency market, is buying and selling some properties such as digital currencies (cryptocurrencies, the central bank digital currency, and virtual currency), tokens and NFTs.

The evaluation system in each market is very similar to one another so the changes in the price, accompanied by the amount of supply and demand by customers and sellers, affects the market. Both markets work without dependency on any agency or government. It is possible to make a transaction at any time of the day and night in the Forex and the digital Currency financial platforms. The only difference is the two-day-off of the currency market.

The currency market goes back a few decades and the transactions in it, conduct in a very clear manner, whereas the digital currency market has been recognized as one of the considerable markets in the world for just a few years now. the number of transactions is very higher in the currency market so trillions of dollars in being transferred daily in this market.

The high liquidity and also the ability to enter or exit at any time exist in the currency market. The liquidity in the digital currency market is low but it’s increasing with each passing day. Before entering each of these financial platforms, there is a need for education, learning some strategies, and market analysis methods. Economic and political news affect the rise or fall of a currency or currency pair in both markets. The fluctuations in very wide in the currency market, whereas the Forex market experiences fewer fluctuations. The currency market has a high influence on the level of economic changes in the world, whereas the digital currency market is influenced by events occurring throughout the world.

The digital currency market, as well as the Forex market, has some exchange places for conducting transactions and some of the largest exchange places are Coinx, Binance, etc. The exchange places in the digital currency market are a place for both buying and selling digital currencies and they accept some wage after the transaction is done.

You understood their similarities and differences by comparing the currency and the digital currency markets. For entering each of these markets, education, resourcefulness, and initial fund are needed. The market analysis methods work for the digital and currency markets, and even in the same direction, you will be able to work in both markets with the proper knowledge and funds.

Is the Forex Market More Profitable or the Digital Currency Market?

The profit you make in each of these financial markets is depended on your, intelligence, talent, education, risk-taking, emotion control, and initial fund. Therefore, you will need basic knowledge and some other things in any financial market in the world such as the Forex or the digital currency market, and using all of them together and coordinated, you will make a considerable profit in both Forex and digital currency market.

Altogether, because of the high number of fluctuations in the digital currency market, there is more risk and probability of making a mistake than in the Forex market.

Conclusion:

In this article, we struggled to familiarize you with the concept “The Forex market or digital currency? Which is more profitable?”. In this text, we realized the greatness of the Forex market on a worldly scale and the huge amount of its transactions. The liquidity in the currency market is very high. It covers various markets of gold, oil, and even digital currency.
Also, the digital currency market is a new market with a lot of profits, but it’s full of fluctuations.
You shouldn’t enter any of these markets without knowledge. In this context, we tried to familiarize you with the features, differences, and similarities between each of the financial currency markets and the digital currency. We mentioned the rate of profitability of each market too.
Dear companion, pay attention that before entering the Forex or the digital currency market, earn the necessary knowledge and expertise and then choose your desired market for conducting transactions.

FAQ:

1. What is a cryptocurrency and what are its features?

In a word, cryptocurrency means encrypted currency and is referred to the currencies that are made on the blockchain platform using cryptography. High security, decentralized structure, and having no surveillance from anybody or any specific government are a few of its features.

2. Is there a leverage coefficient in the digital currency market as well as the Forex market to increase profitability?

Yes, leverage coefficients can be used in the digital currency market for conducting transactions. The only difference between the coefficient in the digital currency market and the currency market is the rate of the coefficient which is higher in the Forex market.