Key takeaways
- Crypto-assets are digital tokens recorded on blockchains, without a central issuer in most cases.
- They trade 24/7 on many exchanges, often priced against stablecoins such as USDT.
- Volatility and platform risk are much higher than in major currencies or large-company shares.
What crypto is
Bitcoin, ether and thousands of other tokens are recorded on blockchains, shared ledgers maintained by networks of computers. Holding the private key to an address gives control of the tokens there. Unlike a currency, most crypto-assets have no central bank; unlike a share, most give no claim on profits.
How it trades
Crypto trades on centralised exchanges, which run order books and usually hold customers' assets, and on decentralised exchanges run by smart contracts. Prices are often quoted in USDT, a dollar-pegged token. Trading never stops, including weekends.
Compared with forex
| Forex | Crypto | |
|---|---|---|
| Price drivers | Rates, data, central banks | Demand, liquidity, adoption, regulation; see Bitcoin drivers |
| Weekend | Closed | Open, often with thinner liquidity |
| Custody | Broker holds positions | Exchange or your own wallet |
| Retail leverage (UK/EU CFD) | 30:1 majors | 2:1 |
Custody
Leaving coins on an exchange means trusting its security and solvency. Moving them to your own wallet means protecting the recovery phrase yourself. Many people split holdings between the two.
Risks
- Large, fast price swings.
- Exchange hacks, freezes and failures.
- Irreversible transfer mistakes.
- Scams; see how to spot trading scams.
Common questions
Why is crypto open at weekends when forex isn't?
Crypto exchanges are online platforms with no central market hours; the forex market follows the working week of banks.
What is a stablecoin?
A token designed to hold a steady value, usually $1, such as USDT or USDC.
Is cryptocurrency trading harder than forex?
The mechanics are similar, but cryptocurrency trading involves larger price swings, round-the-clock markets and platform risks that regulated forex brokers are designed to limit.