From the earliest form of trading where the barter system was used to exchange goods, the invention of currencies, and the industrial revolution that led to increased international trade, we have evolved into the adoption of nuanced trading systems with the advent of electronic technology and the internet. Two of the most spread trading markets today are forex trading and crypto trading.
It is normal to have confusion while choosing the best market that suits you from crypto and forex. This article will guide you through the decision-making process by delving into a brief examination of both. We will go through key differences, profitability, safety, and important additional insights. Let’s get started.
Forex Trading & Crypto Trading: What Are They?
Foreign exchange trading, shortened as forex trading, is the buying and selling process of nation-based currencies in pairs. With examples such as EUR/USD and CAD/JPY, it is the largest financial market with around 18 major currencies and 128 currency pairs. Beginning in the 17th century, the Amsterdam-based currency exchange market was the primary form of modern forex. It then became a well-organized system after World War II when the currencies started pegging to the US dollar, backed by gold reserves. In 1971, forex became a free-floating currency system when the U.S. dollar’s convertibility to gold was suspended.
Cryptocurrency trading started with the invention of Bitcoin in 2009 by Satoshi Nakamoto (a pseudonym). Initially, crypto trading involved the buying and selling of Bitcoin, but the emergence of new cryptocurrencies and other blockchain-based digital assets has made it a multi-billion dollar industry within two decades. Major currencies other than Bitcoin ($BTC) include Ethereum (ETH), XRP, BNB, and Solana (SOL). These currencies can be traded with any other pairs but the dominance of the dollar has made USD-based cryptocurrencies (stablecoins) the default pairs.
Key Differences Between Crypto & Forex Trading
While there are numerous similarities between crypto and forex trading, some distinct differences exist. We can see these differences in the market users, market size, trade structure, accessibility, and volatility. Let’s break it down.
- Market Users: Central banks and governments are major participants in forex trading, not to make profits, but to regulate and stabilize the exchange rate to balance the economy. Other players include hedge funds, institutional investors, retail traders, and international businesses. The retail participants depend on a broker platform to trade. When it comes to crypto, individual and institutional traders, centralized and decentralized exchanges, and miners or stakers, are the main users. Blockchain developers and online communities also play important roles.
- Market Size: Forex is the largest global market, generating a daily trading volume of 7.5 trillion dollars. It is larger than stocks, bonds, commodities, and crypto combined. The crypto market size is around 2.7 trillion dollars (19/03/2025). Despite the small-cap compared to forex, crypto has witnessed exponential growth in recent years. It is expected to reach 6 trillion by 2029.
- Trade Structure: While both markets depend upon supply and demand, forex is highly regulated, making its structure centralized. Crypto is largely transparent and decentralized, with every transaction stored on a digital ledger and verified by the community. Forex’s formalized and regulated market reduces fraud risks while crypto’s decentralization increases transparency.
- Accessibility: Anyone with a wallet address and some funds in it can trade crypto. However, some of the centralized crypto exchanges demand the user to verify their identity (KYC). The trading is available 24/7. In forex, participants require a broker regulated by the authorities and strict identity verification. The trading is limited to weekdays. Unlike over 11,000 currencies to choose from in crypto, forex is limited to 80 pairs.
- Volatility: Although both markets are volatile, crypto regularly witnesses high fluctuations and it is generally low in forex. If we delve into history, we can see 10% to 100% crypto corrections in a day, mainly due to the lack of a central authority to create balance. The interventions of central banks and governments have made forex more stable.
Forex vs Crypto: Which One Is Safer?
Forex trading is generally considered to be safe due to strict regulation, high liquidity, and lower volatility. However, it still has risks, including international economic tensions and unexpected external interventions like the climate crisis. These issues can result in losses, especially to the high leverage positions.
Forex vs Crypto: Which One Is Profitable?
The profitability of both crypto and forex depends upon the tactics used by the trader and a significant amount of luck. If you are a beginner trader, it is easy to enter crypto due to low barriers to register, but forex is preferable for newcomers mainly because of its well-established regulatory framework. Although crypto can deliver incredible returns, it always comes with extreme risks.
Concluding Thoughts: Which One To Choose?
Forex and crypto markets are great opportunities to make significant returns if we study the market carefully and act accordingly. However, choosing between the two is a highly personal decision, which should be based on your goals, needs, understanding of the markets, and patience.
If you like taking risks with the funds you can afford to lose, crypto will fit you. Before investing in any projects, try to learn by accessing the whitepapers and engaging with the communities. Whether you choose crypto or forex, make sure you do your own research to avoid losses.