We live in a digitalised world where a technological revolution is going on. The 21st century is the era of technological discovery, and innovation is the main motive for all. Blockchain is one of the most effective discoveries of this era.
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Why Blockchain?
Blockchain introduced us to the very first digital currency, Bitcoin, in 2009. If we see the data the price of bitcoin hiked 540,000% from 2012 to 2022, can you just imagine that? this singular stat is enough to make us believe its potential. The innovation of Blockchain is still in process as we are hopeful that it will help us in many finance and exchange processes.
The advancement of technology forced Blockchain to give us Cryptocurrency, through which we are able to transact and trade digitally with anonymous nature.
Well, after the emergence of Cryptocurrency, the trading nature of people has changed from the traditional trading process. Thus, we need to understand the basics as well as the differences between the stock exchange and Cryptocurrency.
What Is Cryptocurrency?
Cryptocurrencies are digital currencies that run on a decentralised process delivered by Blockchain. It is a decentralised process and thus is anonymous to the tried parties.
The Cryptographic technique is crucial in this case to make the transactions secure. It is typically used as a medium of exchange and also as a store of value. The market value of Cryptocurrency depends on the supply and demand process.
What Is Stock?
On the other hand, stocks are known to all as they have been in the market for a long time. This can be seen as the partial share of a company’s equity.
If you purchase a stock, that can also mean you as a share of the company. The price of a stock can fluctuate at times. It depends on the profit of a company and the news announcements of the company.
What Are The Differences?
There is a significant difference between Cryptocurrencies and stocks. In general, we might think that both are trading, so there is no difference, but there is. Let’s find some points which can determine the differences between these two.
1. Ownership
Stocks determine the ownership, and on the other hand, Cryptocurrencies do not follow any ownership process. For instance, if you purchase a stock of a company, then you will be judged as the partial owner of the company.
In contrast, Crypto users are not allowed to receive dividends. Instead, one only can stake or lend the Crypto coins for a passive income.
2. Market Access
This is a very crucial factor that can determine the difference between stocks and Cryptos. You can invest or acquire Crypto through their platforms at any time of the day from anywhere in the world.
On the other hand, the stock market opens for sale, especially on the weekends, for hours, and if you want to purchase a stock, you have to do it within the open poll.
3. Trading Pairs
Stocks can be purchased and sold with fiat currencies, and on the other hand, Cryptocurrency may follow the trading pairs.
With trading pairs, two currencies can be directly exchanged. Bitcoins and Ether have commonly used currencies, and most people use these for their trading purposes. If you use any other coins, you have to convert them first into a common currency and then convert it to your desired currency.
Where Should I Invest?
Both Cryptocurrency and stock exchange have advantages and limitations. We have to understand both and then invest according to our criteria. Many experienced investors are using diversified portfolios, and they are getting in touch with both stocks and Cryptos.
Advantages Of Using Cryptocurrency
- It is a decentralised process.
- It is borderless and thus more accessible.
- It is flexible and does not consider inflation.
Disadvantages Of Using Cryptocurrency
- The price of Cryptocurrency is very volatile.
- The regulations are not perfect yet.
- Returns are not guaranteed.
Advantages Of Using A Stock Exchange
- It is more accessible than Cryptos.
- Properly regulated.
- Wide variety of stocks is available in the market.
Disadvantages Of Using A Stock Exchange
- The market is volatile.
- Stock fees are high
- Return is not guaranteed.
Make A Decision
It’s your time to make a decision on where you are going to invest your money!
Never forget to do proper market research no matter where you are investing. The information in this article will be helpful for you to understand the differences and efficiencies between stocks and Cryptocurrencies. Do not forget to flame back with your comments!
