Currently, investment has become one of the primary needs for society. Because by investing, you can have additional and passive income from the various assets you have. Apart from that, investment also makes it easier for you to maintain the valuation value of your assets from inflation.

There are various instruments that can be used for investment. Starting from property, foreign exchange, to crypto assets. Among the many crypto instruments, the instruments that are most interested in are foreign exchange and crypto assets.

So, what’s the difference between the two and which one is more profitable?

Forex: Making Profits Through Foreign Exchange

Forex, which stands for foreign exchange, is a foreign currency exchange transaction. In Indonesia itself, the term that is more commonly used is foreign exchange or foreign currency. Forex itself is not only used for trading, but also for various reasons, such as business, trade or tourism.

To make foreign exchange transactions, you can visit the forex market. The Forex market is where various foreign currencies are traded. Currency exchange itself is important for most people around the world. Currency exchange business is necessary to carry out foreign trade and business.

Unlike stocks, forex can operate almost all day for 24 hours. These operating hours are not interrupted, although there are often overlaps due to time differences in various global regions.

From a market standpoint, most of the forex market is OTC, while stocks are traded more often through exchanges. In forex terms, OTC or over the counter is a transaction through a decentralized network between brokers and dealers.

This means that no single exchange dominates forex trading. Apart from that, forex traders can also negotiate without any authority that regulates and guarantees the transactions made. Trading itself can be done if the terms have been agreed by the owner of the asset directly or through a broker. Brokers are intermediaries who facilitate transactions on behalf of clients.

How to Make Profit Through Forex?

Reporting from Babypips, you can benefit by taking advantage of price fluctuations. You can buy foreign currency when the price goes down and sell it when it goes up.

In forex, foreign exchange buying and selling transactions are carried out in pairs. For example, if on the forex market you find a EUR/USD trading transaction option, that means you are buying Euros by selling US Dollars simultaneously. Under these conditions, the most optimal way to make a profit is to sell the Euro at a stronger level in the future.

The difference between Forex and Crypto Assets

Even though both are investment instruments whose profits are made through trading activities. In fact, these two assets have quite significant differences. Here’s the difference :

Forex and Crypto Asset Market Turnover

Forex market has a bigger market. The average daily turnover rate that the forex market has is already in the trillions. Even in 2016, in one day there were 5 trillion US dollars traded on the forex market. This amount is very different from Bitcoin which has a turnover of only 1 billion US dollars.

According to Sigit Tanoko, who is an experienced trader, entrepreneur, author of the book Bitcoin 101, cryptocurrency influencer, as well as Director of the Indonesian Coin Alliance, in terms of scale, the forex market is bigger than crypto assets.

“Because forex has a bigger market and bigger capital. We never know the price,” he said, Saturday (6/3) in the ZipTalks Vol. 2 which was held by Zipmex Indonesia.

BTC trading isn’t even as big as one of the Swiss franc foreign exchanges. The Swiss currency is responsible for 5 percent of trading volume and $243 billion in daily turnover on a daily basis.

However, one of the advantages that crypto trading has is that it can show returns of more than 70 percent. Such a high return value is almost unheard of in forex trading.

Stability and Volatility

Forex does not have the same volatility as crypto assets. Because the value that is owned by forex is more stable. It is difficult to take advantage of the small differences in the exchange rates of the individual foreign currencies.

Forex also has a higher level of liquidity compared to crypto assets, because they are much easier to exchange. One example is exchanging US dollars for rupiah.

Foreign currency exchange transactions can also be carried out in a short time. In terms of options, foreign exchange also has more choices. Even at the exchange rate, the desired currency value is smaller than what you want to exchange. High liquidity makes large scale in trading, will not change the price of the asset too much.

This is of course very different from what happens in trading crypto assets. Large volumes of trades made in crypto assets can have a direct impact on market prices. Especially in altcoin crypto assets and tokens that are not very well known.

In terms of costs, crypto asset trading and transactions are cheaper than forex. Crypto asset transactions and trading are now no longer difficult to do. There are already many platforms that provide services for users to jump in and start trading practically and efficiently.

The significant volatility that crypto assets have also makes traders used to the big changes that occur every day. Crypto asset traders will take price changes as commonplace.

Rising and falling crypto asset prices are also fully influenced by market mechanisms. In contrast to forex, whose value is influenced by socio-economic factors such as inflation, economic factors, and political conditions. Sigit Tanoko also added that there are often certain parties who make various machinations just to piggyback and bring down the prices of forex market assets.

“For example, news comes out on Friday, but only affects the market on Monday. Before the news appeared, all the big players already knew about the news,” he said.

Security and Regulation

The next difference that is no less important to note from forex and crypto assets is the level of security. Forex has several layers of protection. Intermediary or brokerage accounts are usually insured by the Government to anticipate theft or fraud.

In contrast to crypto assets that use blockchain as a layer of security. But in the world of crypto asset trading, cases of hacking or theft of crypto assets occur not on the blockchain. The immutable nature of Blockchain makes illegal transactions difficult to carry out. Although it does not rule out the possibility that it can still happen.

Most cases of crypto asset theft occur on trading platforms (exchanges). Therefore, you must be careful when deciding to use a particular platform. One of the platforms that you can consider is Zipmex.

Forex and Crypto Assets, Which is Better?

The answer, of course, depends on you. You can choose the assets that best suit your wants and needs. Foreign exchange or forex trading can offer more integrated stability, as well as an industry with more infrastructure and clear regulation. However, the profits achieved through forex will not be as big as trading crypto assets.