When you look for the differences between crypto trading and stock markets then you can find several of them. What immediately comes to mind is volatility, risks and profits.
Crypto markets are mostly known for their exceptionally volatile nature. If you look at the crypto market, you will see high price spikes and downfalls which are never good for a portfolio. In case you are wondering, how can this happen?
It depends on price manipulations done by bots, lack of proper regulations and some dump schemes, for example. However, some of these issues are solved. Whereas in case of regular investments in stocks, governments and stock markets have finally come to realisation that impartiality will be beneficial for everyone involved in the stock market.
Against these shady practices, both of them have implemented some strict rules and laws. Due to the lack of regulations, there are now high fluctuations in cryptocurrency markets as compared to stock markets.
Cryptocurrencies in the Developing World
Cryptocurrencies can play an important role in developing countries as a reliable channel for digital payments. Recently, several countries experienced problems with fiat currency so some people invested their money in cryptocurrency.
These countries include Australia, India, Venezuela, Greece and many African Countries. In most of these countries, citizens don’t get a chance to invest their money in stocks. So, what can they do other than invest in cryptocurrencies? There is no other way for them to invest money in a trusted way.
The process of creating a cryptocurrency is quite easy. So, if you compare stocks with cryptocurrency than the latter has high turnover rate. However, due to the ancient technology, there are some talks that Bitcoin might go down. But as a result, Bitcoin developers responded by implementing Lightning network. This new technology can increase the durability of Bitcoin.
When talking about the stock market, your share cannot die because old businesses can never die at the pace that you see in the crypto space. Moreover, stocks have some generations old loyal investors with high level of trust. So it takes time for company to fail.
If you invest in the stock market, then as a shareholder, you can get a lot of legal rights. To better understand this in a simple way, you’re essentially considered as an owner of a small part of the company you invested in.
In addition to this, some shares allow you to take part in the shareholder meetings that happen within a particular interval. In these meetings, several managers, high level members of the company take part along with shareholders and together they discuss the future of the company and what will be the next step.
However, if a company goes bankrupt only then the true extent of your ownership rights come to light. Moreover, you will be the first one to get part of the company’s assets.
However, this is not the case with cryptocurrencies. If you own a cryptocurrency then it doesn’t mean that you have legal right on them. In reality, it is just a piece of a coin that has a high value and people are willing to purchase it at that price. Every cryptocurrency company make it clear that they don’t come with any rights.
In crypto trading as in any other type of market, there is manipulation. This is even easier in the cryptocurrency prediction market. Is manipulation negative? It depends on the damage it can cause.
Rather than market manipulation, it is speculation, with price volatility, that can help to involve more people in the crypto space.