When people want to make some money on the side, they look online. Fortunately, the internet offers all sorts of ways for people to earn some extra cash. One of the most popular ways of doing this is by trading currencies. There are two types of currency: fiat currencies, which are traditional currencies such as the dollar, the pound sterling and the euro; cryptocurrencies, which are entirely digital and decentralised currencies including Bitcoin, Litecoin and Ethereum.

The good news is that both types of currencies are traded online. In this post, we’ll have a look at how the forex trading market (which deals with fiat currencies) compares and contrasts with the cryptocurrency trading market. Keep on reading and you may find that trading one type of currency appeals to you more than the other.

Operations

The forex trading market is opens every week from 5 p.m. EST on Sunday to 4 p.m. EST on Friday. So, for most of the working week, it’s open. As for the cryptocurrency market, it’s open 24/7 and never has any closing times. People have been exchanging foreign currencies since as far back as the early 19th century, though the modern trading market as we know it today only began in the early 1970s. The cryptocurrency trading market is obviously a lot younger since it was only in early 2009 that the first cryptocurrency, Bitcoin, was publicly released.

Volatility

Both the forex and cryptocurrency trading markets can be quite volatile. This can be a good thing, as it may result in your trading becoming a lot more valuable; but, having said that, there’s also an element of risk as a high volatility can also wipe a lot of value of your currency in an instant. Though both types of currencies can have quite sudden and extreme fluctuations in value, cryptocurrencies tend to have more frequent variations and are generally seen as the more volatile of the two. This is mainly due to the fact that they’re young – some have only been online for a few years. Fiat currencies can be quite stable, though major world events can cause values to change very abruptly indeed.

Gains

With forex trading, you’re less likely to have large, short-term gains; you’re more likely to make smaller profits that, over time, eventually add up to a significant return. On the other hand, if you’re trading cryptocurrencies, you stand a better chance of making a large, short-term gain. However, the cryptocurrency trading market, as mentioned above, is more volatile and experiences more changes in pricing. If you do happen to strike it lucky, there’s a chance that before long, you could end up having a major loss. There’s less of a chance of making massive losses when trading fiat currencies.

Costs

The fees associated with cryptocurrency are usually on the lower end, so you’ll get to keep a greater percentage of the money you make. If you access the market yourself without using a broker, you’ll get the lowest fees around. As for the forex trading market, the costs are higher most of the time.

Liquidity

Because the forex trading market is so huge, it’s very liquid. You’re able to purchase large amounts of a currency without affecting its price too much, or without affecting the price at all. The cryptocurrency trading market, by contrast, is a lot smaller, so some transactions, especially larger ones, can end up having an effect on pricing.

Security

One of the key advantages that the forex trading market has over the cryptocurrency one is security. The former is backed by banks, government institutions and financial authorities, while the latter isn’t regulated. A core aspect of cryptocurrencies is their anonymous nature; they’re not tied to a central organisation like how fiat currencies are, so while this gives users more privacy when making online transactions, it also affords them less protection. Cryptocurrency wallets and exchanges still have protection, of course, but generally speaking fiat currencies, and the trading of them, are thought to be safer.

Which One’s For You?

So, if you’re going to start trading currencies online, which will you go for: fiat currencies or cryptocurrencies? The forex trading market is more secure, more stable, better protected and longer established; the cryptocurrency trading market isn’t as secure, stable or protected, nor is it anywhere near as well established, though it can offer larger returns.

The two markets are similar in that they’re digital and involve trading currencies. The forex trading market is recommended for beginners and anyone who wants a more reliable trading experience. The cryptocurrency trading market is perhaps better for those who are prepared to take more risks to gain higher rewards. Whether you go for one or both, good luck!