Bitcoin is decentralized digital money that is based on blockchain technology. Bitcoin is not owned or controlled by the government. It is true that if you have knowledge about stock trading then you can easily understand the bitcoin trading system, but you must know the differences between bitcoin and stock trading. Stocks are issued by a company and you will lose your investment if the company fail to perform well. On the other part, Bitcoin is a decentralised peer-to-peer currency where no company or government is involved.
Before opting for Bitcoin trading, investors should make a comparative study of its trading practices with the traditional stock trading practices that most people are familiar with.
Comparison between bitcoin trading & stock trading
Similarities:
Cryptocurrency exchanges and stock exchanges have some common features. Both of them facilitate trade. The similarity between stock trading and bitcoin trading is in the similar experience that both the platforms offer various trading options to their investors. Most investors log on to a brokerage account, a mobile app, or a digital exchange to do their financial transactions. It is easier now to buy and sell stocks. But you must ensure that you opt for a safe trading platform like link that is trusted by investors and traders. But, stock exchanges and Bitcoin exchanges are different. You need to buy stocks through broker or you need to open a demat account to buy and sell such stocks. In the case of Bitcoin investment, you can use any online platform to buy your coin and you can use them through your wallet for online transactions.
Differences:
1) Types of assets
The type of assets used in a stock exchange and bitcoin trading is primarily different. A stock exchange trades in company shares and stocks whereas bitcoin trading is done with digital currency. Stocks are owned by the companies and you can buy their stocks to hold some shares of the respective companies. There are certain regulations that need to be maintained by the company to enter into a stock exchange and their stocks are audited by the government. Bitcoin is digital money that is free from such regulations. Anyone can buy bitcoin from any corner of the world.
2) Costs incurred in setting up a trading account
Before you start stock trading, you need to hire a broker and pay a fee to buy and sell stocks. You need money, to get started and cover the broker’s cost, and bank charges for transactions done. You do not need to go through such hassles when you invest your money in Bitcoin. You do not need to hire a broker for the same. You can find a reliable online platform where Bitcoin is available and register your account with your KYC. Once your account is activated, you can start your investment in Bitcoin.
3) Market history
Stock trading has a much longer history compared to cryptocurrency trading. It is backed by government and has to abide by laws and regulations. Companies that have their stocks listed have to make their market activity public, which includes quarterly financial updates and minutes of their general meetings of shareholders. The long history of stock trading has ensured the high volumes and diversity of trade.
Bitcoin exchanges are still a new concept. Their volume and diversity of trading is nowhere near that of stock trading. But this market is constantly growing and has garnered the interest of both investors and asset managers.
4) Trading hours
Stock exchanges operate for a limited time period, each day. Also, there are no transactions on holidays. At Bitcoin exchanges, transactions can be done 24×7. This results in the crypto market instantly reacting to any occurrence that may influence the market.
5) Market volatility
This is one of the biggest differences between these two trading markets. Stock trading is associated with low volatility. Bitcoin trading, since its inception, has always been highly volatile. The highs and lows of this market are very pronounced which means that an investor can make profits quicker but at the same time the risk factors also multiply.
Conclusion:
Investing in Bitcoins has attracted the attention of investors all across the globe in the last few years. But one must understand how it works and the associated risk factors before taking the plunge.
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