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Guide to Forex Trading With Bitcoins

bitcoinUnlike other currencies on the Forex market, Bitcoins are not an actual world currency, in the sense of being produced by a central bank and issued in the form of coins and banknotes. Instead, it is a virtual currency; in fact, it is the world’s first cryptocurrency, and has no physical form, being held entirely electronically instead. While Forex traders have enjoyed participating in the traditional markets for years, the arrival of this new and exciting cryptocurrency has led to a deeper dimension in trading with a range of new possibilities, and interest around this new type of trading is starting to rise. Created as recently as 2008, with the open-source software being released in 2009, Bitcoin has rapidly risen in profile, and is now being offered as a trading instrument by many online Forex brokers.

What are Bitcoins?

Unlike all other currencies, Bitcoins are digital, and are therefore held and created electronically with no one organisation or bank being in control of them. Bitcoins were created by a man using a nickname “Satoshi Nakamoto” (in May 2016 Craig Wright revealed himself as the creator of Bitcoins), a software developer, with the idea of creating a currency that would be completely independent of central authorities, but which could be electronically transferred instantly with only a low transaction fee applied. Bitcoins cannot be devalued, as only 21 million are permitted to ever be produced. However anyone with the right know-how can create Bitcoins, as they are mined using a distributed network of computing power. Transactions are also processed by this network. Each Bitcoin is divided into parts of 100 millionth of a Bitcoin, and these are called “Satoshis”. Although traditional currencies have their basis in precious metals like silver and gold, Bitcoin is different, having its basis in mathematics. Bitcoins are produced using a freely available open-source mathematical formula.

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What are the Benefits and Risks of Trading Bitcoins?

Bitcoin trading is becoming more popular due to its many benefits. These include the following:

There are, however, increased risks associated with Forex trading in Bitcoin:

What Affects the Price of Bitcoin?

As with any currency, there are several factors that impact on the value of Bitcoins. These include the following:

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