A long debate has been going on about which is better: Stock Trading or Bitcoin mining. Some investors and famous business people have accepted cryptocurrencies as a future investment.
Bitcoin trading runs on blockchain (peer-to-peer) technology, a decentralized process. Cryptocurrency provides a new investment market where any corporation does not own crypto assets. Stocks are listed and managed by companies and the government. Trading stocks involves buying a few shares of a company and selling them at a higher price to earn profits. Unlike Cryptocurrency, owning stock gives you ownership rights over the company.
Both trading methods are a great option for pursuing financial independence. However, investors and traders can choose the market depending on their knowledge, experiences, and financial goals.
Where do you want to invest? So, we have prepared a guide to share the difference and similarities between stock and Bitcoin trading.
Table of Contents
How Does Stock Trading differs from Bitcoin Trading?
1. Ownership of Assets:
Bitcoins (BTC) are much easier to own than stocks. Cryptocurrencies can be mined online, but stocks cannot. If you get the actual paperwork, you can own stocks, but until then, those stocks can’t be yours.
On the other side, cryptocurrencies don’t offer you shares of the company – unless you have bought them through an STO (Security Token Offering), where each token is backed by the company shares.
2. Market Volatility
Volatility is the factor to decide the stability of the market. A low volatile market ensures a more stable market and higher rewards after the wait for a long period. Buying large volumes makes the market stable and less prone to the movements of big bull or bear trades. Besides, any risk and fall in the stock markets can be affected by geopolitical relationships.
When talking about trading in bitcoins, investors can face a highly volatile market, where it is normal to experience a hike and sudden fall. To lower the risk of financial loss, traders should use the internal rate of return ( IRR) – a financial analysis method to calculate or estimate how profitable the investment you are doing. By using IRR, you will understand that the stocks/bitcoins you are buying offer better returns than the alternatives.
3. Fees and Regulations
Stock is exchanged through a stock exchange platform, which governments and financial institutions heavily regulate. Also, stock exchanges follow the rules and regulations for security purposes, whereas bitcoins follow little to no government rules and regulations. Moreover, stock exchangers charge higher fees than crypto exchanges and brokers.
4. Trading Hours
Stock trading can be done between 9 am and 5 pm, and there is no trading during weekends and public holidays. No geopolitical or other events can influence the market. Instead, traders don’t get a chance to plan which stocks to buy and sell when the market reopens.
No matter what day of the week or holiday it is, Cryptocurrency exchanges are always available. The market will be open 24/7 and allow you to make profits. So the moment you decide to invest in cryptocurrency, you can look for the best crypto exchange, register yourself and start trading. News and other events will also impact the crypto market. So, make sure you are quick enough to minimize the potential of missing opportunities or important news.
Similarities between Stock and Bitcoin Trading
Even though both asset markets share so many differences. Still, they have some similarities too:
- Both stocks and digital money work the same. With the cryptocurrency exchange it has become easier to invest in cryptocurrency. You can explore the best option easily. Cryptocurrencies and bitcoins can be exchanged through any exchange platform.
- The demand and supply impact the value of cryptos and stocks
- Both are types of risky investments where you can lose a big amount.
- Stock trading and Bitcoin trading can be done through digital platforms and buy or sell trades instantly.
- Stock and Crypto exchange platforms allow traders to set the limit order when buying ( lower the current price) and selling ( higher the current price).
Consequently, both trading has its pros and cons. Investors and businesses can diversify their portfolios by investing in different assets. Keeping the basic tips as the center point of your investment will help you make more profits.