The 411 on Bitcoin Forex Trading

As a forex trader, you should be aware that there’s a new virtual currency circulating around the internet known as a “bitcoin.” It’s a decentralized currency that can be used for online purchases and can be actually be exchanged for real money.

While the bitcoin has gained a lot of public attention only recently, it was developed way back in 2008 by someone using the pseudonym Satoshi Nakamoto. He explained the concept of “mining” bitcoins by using your computer to solve puzzles and search for 64-digit number combination for the bitcoin network. If your computer is able to generate that combination, you will receive 25 bitcoins.

Recently, the value of one bitcoin reached a high of $250 U.S. dollars. It has already appreciated from its value when it was first introduced when one U.S. dollar could buy 1,309.03 bitcoins. Take note though that bitcoins aren’t tendered; they are simply a digital-only currency.

Why is this relevant to forex traders?

Apparently, there are a few brokers out there that are starting to include bitcoin-denominated accounts in their list of services. For instance, Bit4X, a Slovenian broker, allows its clients fund and withdraw their accounts with this digital currency.

Bitcoin trading probably won’t hit mainstream any time soon, but having a bitcoin-denominated account can be a good thing. For one, bitcoins have been steadily rising in value in the past few years, with the value skyrocketing in the past few months.

There always remains the threat that the euro zone may collapse, which makes its domestic currency, the euro, unstable. By simultaneously investing in bitcoins, you are able to hedge your risk.

As bitcoins become more popular, we may eventually see BTC/USD and other BTC pairs be offered by brokers.

Of course, there are some hitches here and there when it comes to bitcoins.

First, because it is decentralized, the bitcoin isn’t backed by any central bank. This could be problematic when it comes to the application of regulatory rules upon bitcoin forex trading account or eventually, the trading of BTC pairs.

Second, this also creates problems in terms of client claims against brokers with regards to malpractice and/or trading errors. It may be hard to track from where the bitcoins come from, or if the broker is actually using “real” bitcoins.

Lastly, there also remains the stigma that bitcoins are synonymous with money laundering, as some people use bitcoins to hide money they don’t want to be traced back to them. In order to avoid problems with this, some regulators may even implement a total ban on bitcoin-denominated accounts.

In any case, this is an interesting development that I’ll be keeping an eye on over the next couple of years. Who knows, it might even be a major game changer for the forex trading industry!

  • Olivier Gagnon

    Bitcoins crashed to 70$

  • gbfree

    this chart says it all for bit coin https://coinbase.com/charts

  • kingsky

    you guys do know the only reason why bitcoins can exist is because drug dealers and criminal syndicates use it as a store of value right? think of bitcoin as a derivative for drugs/evil

    • Chris

      You do know that one of the first Bitcoin transactions was when someone bought two pizzas for 10,000 BTC, right?

      Bitcoin existed long before it was used to buy drugs or other “evil”.

      The fact that Bitcoin is capable of being used by drug dealers just means that it works like real money should. It is used for many other things than just dealing drugs.

  • Marry David

    Good information about forex it is very helpful for peoples

    Forex deadly mistakes

  • Simpa

    Just another proof that Forex is a crazy game!

  • Jo D

    i dont know if this external links policy is still active but to all the
    people who think it’s only crime syndicates and scam artists check out
    (im not affiliated) bitcoinsocially.com and meet a lot of people round
    the world who are into it (i havent met any don or capo there)
    There’s
    one other thing i’d like to mention : any forex market closes on
    weekends, gox and btc for instance (the largest holders in btc exchange
    are open 24/7 all week through) There’s immense potential but if you
    dont watch your wallet carefully you might lose a lot of money. There’s
    plenty of hackers around who are always willing to but its all so new
    and this is mostly regulated by the community itself. Bad press is more
    lethal than governmental control sometimes. And the classic argument
    indeed : Al capone built his empire on bitcoins and before the rise of
    anonymous proxies and the internet there were no pedophiles at all. I’m
    somewhat of a believer in the possibilities it offers and it’s not all
    that anonymous since if you give a wallet id public anyone anywhere can
    check its contents and transactions.
    And, there was no ‘crash’ as
    such in fact, it has just retraced to where it would be without the
    short-term hype that made it explode upward and it seems to have stabilized at about $90-100 atm

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