Major Differences Between Trading Cryptocurrencies and Stocks

Introduction

Cryptocurrencies have become one of the main investment options for many investors. There is so much noise about the next ICOs, investment in blockchain technology, and adopting the digital currency market. Apart from that more people are attracted to the crypto market from stocks with the hope of getting more profits. 

In fact, there are many pros and cons of cryptocurrencies. However, it has become one of the mainstream investment options in recent years. But the main problem with many traders is that they think the crypto market as the stock market are similar. In reality, there is a big difference between the two which has discussed below. 

Difference Between Crypto and Stocks

There are many differences between crypto market and the stock market. But we will focus on only a few important distinctions. 

Decentralization 

One of the major differences between crypto and stocks is decentralization. That means cryptocurrencies operate through a decentralized P2P public network which is not as same in case of stocks. There is no third party (governing body like government, bank, financial institutions) that is involved to regulate the transactions in cryptocurrency. The transactions in the cryptocurrency market happen by the users in the network via blockchain technology. Whereas, stock markets are regulated by many regulations of the government, banks, and financial institutions. So the key difference here is the regulatory body.

Purpose

Stock markets have a simple reason that they are created for fundraising for companies. The stocks of a company are initially offered in an event called Initial Public Offerings within a stock exchange. Whereas cryptocurrencies can be created for many reasons such as gaming, programming, fundraising, etc. 

In fact, cryptocurrencies are nothing just computer codes which are running through a decentralized network. On the other hand, stocks are paperwork, motifs, etc. 

Security

In terms of security, stocks are far safer than crypto because of a few reasons. Stocks are regulated by legal norms and the government. So, there is less chance for any fraudulent activities or scams in the stock market. But in the crypto market, there is a high probability that your money could be lost due to the decentralization and no authority body governing the network. 

Anybody can create a decentralized ledger and steal your money without your knowledge. So when you are trading in cryptocurrencies be very careful about choosing your exchange as well as trading software and digital wallet.

Risk Factor

As cryptocurrencies are highly volatile so it comes with a greater risk. However, high risk comes with high rewards and this is a key reason that more people are getting interested to move towards the crypto market. But the problem is that you cannot earn a regular income from the crypto market like in stock markets due to high volatility. 

Operation

In most cases, stock trading is very straightforward in operation. You just need to add money to your stock trading app or account and directly invest in stocks.  On the other hand, crypto trading is a complex process where you need a crypto wallet to convert your money into cryptocurrencies like Bitcoin or Ethereum then invest in the market and again you need to convert your coins into cash which is a complex process. If you want to invest in cryptocurrencies then bitcoin up (bitcoin up review ) provides a great platform with simple operation and safe trading.

Final Note

Finally, the future of the crypto market is still uncertain due to poor infrastructure, incomplete adoption, and deregulation.  On the other hand, stock markets are greatly institutionalized, and people trust the way it operates, and it is a large part of the economy of a country. So, the future of stock market is obviously looking certain. Hopefully, the article has helped you to understand the major difference between crypto and stocks.