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Crypto Trading vs. Stock Trading: 4 Major Differences


If you purchase a stock, you have a percentage of ownership of that company. But if you acquire crypto, you own a particular amount of that currency. The value of both fluctuates over time, which makes the trading experience similar. In this guide, we are focusing on the major differences between crypto and stock trading. You’ll understand both options better, which will help you decide on a suitable choice for your next investment.

Here is a quick overview of what we’ll cover in this article:

1. Regulation and Ownership

The crucial word to remember here is centralization. The governments regulate stock markets, which makes them centralized. On the other hand, cryptocurrencies mostly use decentralized exchanges, and authorities don’t have any control over them.

If you want to buy a stock, you’ll need to provide personal information. Depending on the country, that could include name, address, signature, etc. But there’s no need to share any details to acquire crypto. All you need is a digital wallet where you will keep assets like Bitcoin. You can keep the sensitive wallet information on a USB drive or store it on a computer.

Crypto gives you a higher level of anonymity but also less protection from fraud and theft. You could lose the USB drive, or someone could hack your computer. There’s no organization that protects you if that happens. But if you become a victim of fraud involving stocks, you can turn to a relevant national agency. In the United Kingdom, Financial Conduct Authority regulates the stock market. These regulations help to protect you while trading.

2. Access to Markets and Trading Hours

You trade stocks on the stock market, which have been around for over 200 years. The New York Stock Exchange might be the most famous trading market, but there are many other platforms available. Their common trait is that they are only open during working hours in their home country. That means you can’t access most stock exchanges on weekends or holidays.

Trading hours of crypto exchanges are 24/7, and that includes weekends and holidays. Although they haven’t been around for a long time, they have huge daily trading volumes. For example, Binance started in 2017 and already achieved a $50 billion daily trading volume. That’s still nowhere close to Nasdaq as its trade volume is 5x higher.

  1. Which Is More Volatile?

Stocks are generally less volatile, and it’s easier to find a safe trading option with low risk. Read more here to discover how to buy stocks of reputable worldwide corporations today.  It’s worth noting that volatility depends on many factors. Some stocks have a higher risk but can also generate bigger gains. 

The good news is that you can access public information for most companies whose stocks are available on the market. That gives you enough info to analyze a particular option before acquiring it. And while unpredictable events can still happen, they aren’t as frequent as in the crypto world.

Things are often hard to predict with cryptocurrencies. The reports that Elon Musk and Mark Cuban agreed that Dogecoin is the “strongest” crypto increased its value suddenly. Those drastic fluctuations without visible warnings are fairly frequent in crypto trading.

Crypto markets offer higher volatility. That means they are riskier but can lead you to a bigger profit. The reports reveal that the value of Ethereum increased from $1,000 in 2018 to $4,000 in 2021, which is a 400% increase.

  1. Trading Costs

Do you want to acquire or sell a stock? It will require contacting a broker to finalize the transaction. Most brokers charge per transaction, and you might also encounter additional deposit and withdrawal charges. For example, if you join a stock fund, you’ll need to pay the manager a certain fee.

Crypto trading can come with multiple charges, too. If you use exchanges, the odds are they will have a significant fee. Some currencies have other fees, which could result in paying 1.5% or more per transaction. That’s a significant burden that could lower or even compromise your profit.

Final Thoughts

Stock and crypto trading might be similar at their cores, but there are many distinctions between these options. You could describe stock trading as the right option for those who want to play it safe. More adventurous investors who don’t mind bigger risks could try crypto. It ultimately depends on your investment style. The major takeaway is that stock trading is regulated and monitored by the government and relevant agencies. That’s not the case with crypto trading, which is why you need to be careful to avoid fraud and other issues.

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