What is the main difference between a stock exchange and a cryptocurrency exchange? We all know that the history of trade is as long as the history itself, but the stock exchange we know is a relatively new phenomenon - at least 400 years old. However, almost every country has an exchange, which provides a broad market for the purchase and sale of global currencies and commodities. The Cryptocurrency Exchange, created to facilitate the trading of cryptocurrencies, is a new member of the global market. One key thing that cryptocurrency exchanges and stock exchanges have in common is that they facilitate trade. However, asset trading methods, market volatility and many other factors are different between the two exchanges. Now let's understand the main differences between cryptocurrencies and stock exchanges.

What is the main difference between a stock exchange and a cryptocurrency exchange?

1、 Trading assets

Asset Type

This is the main difference between cryptocurrency exchanges and stock exchanges. Stock exchanges trade company stocks or shares, while cryptocurrency exchanges trade cryptocurrencies (digital currencies), such as Bitcoin, Ethereum, etc.

Asset ownership

Shares traded on the stock market represent the equity of a company. When you buy shares of a company through a stock exchange, you become part owner of the company itself. The company's operating conditions also determine the value of your shares.

The purchase of cryptocurrency, whether coins or tokens, does not necessarily represent partial ownership by the company that issued it. It is a digital currency, so its value is subjective. Cryptocurrencies are easier to own than stocks.

Asset issuance

According to local laws and company regulations, listed companies can issue shares at will to raise funds. In contrast, most cryptocurrencies have a maximum number of coins or tokens. For this reason, basic economics suggests (considering all other factors) that the value of viable, capped cryptocurrencies will increase as demand for them increases.

2、 Market maturity

The trading time of stock exchanges is much longer than that of cryptocurrency exchanges, so they are more mature. Regulations and local laws regulate their activities, and the stock exchange is also supported by the government. The Company must also provide transparency to shareholders through open market activities, including quarterly financial updates and shareholders' meeting minutes.

In view of its maturity, the stock exchange has a large trading volume and diversified trading. However, the maturity of the stock market provides sufficient opportunities for some traders to dominate the trading circle. This may be detrimental to small investors because the stock market rewards large investors with lower transaction costs or commissions.

On the other hand, the cryptocurrency exchange is still young and in a state of sustainable development. Although measures have been taken to strengthen the supervision of exchanges to boost investor confidence, most of their activities are currently outside the regulatory and political fields. In view of its short history, the number and diversity of cryptocurrencies traded are also far lower than those of stock exchanges.

3、 Volatility

When it comes to markets, volatility tends to cause extreme caution. In fact, market volatility can be considered both positively and negatively.

Low volatility means a more stable market (and investment); However, this often means waiting longer for financial rewards. This is usually the case with stock exchanges.

The large trading volume increases the stability of the stock market and makes it less vulnerable to the influence of "big fish" traders. In other words, given its links with global governments and enterprises, stock exchanges are often affected by geopolitical events.

In contrast, cryptocurrency exchanges are more volatile. The market is new, so its high and low points are very obvious, which makes the cryptocurrency market vulnerable to the trading changes of "whale" traders. Whale traders are people with a lot of bitcoin. This means that the whole market may be easily affected by the trading decisions of a large number of investors. For example, with the news that the influencer Elon Mask will invest 1.5 billion dollars in Bitcoin in January 2021, the price of Bitcoin will suddenly rise by 17%, hitting a record high. However, since cryptocurrencies are independent of governments and other global institutions, they are largely immune from political influence.

4、 Market scope

Want to start trading on the stock market? All right, get ready to wait. Given the maturity of the stock exchange and the numerous rules and regulations surrounding it, the process of starting trading can be time-consuming and labor-intensive.

You need to find a broker for yourself. Once you have a broker, you need to obtain approval before you can buy or sell. In addition, transactions are limited to business hours. As you began to see, access to the stock market is controlled.

On the contrary, cryptocurrencies can be traded at any time and on any day, regardless of public holidays and major events. Anyone has the ability to conduct cryptocurrency transactions, which makes it easier for people of all social positions to access it. Getting started is a relatively simple process. The cryptocurrency exchange is open 24 hours a day, which allows rapid trading activities.

5、 Charging standard

This is a clear distinction between stocks and cryptocurrency exchanges. The stock exchange has developed into a market subject to strict supervision. There are rules to protect traders and investors; Help maintain a level playing field.

In addition to rules and fees, the cost of crossing the stock exchange is relatively high. When the broker collects fees or commissions, the bank will charge you payment fees, and capital gains will be taxed.

The cost of trading on cryptocurrency exchanges is relatively low. The costs associated with trading on the blockchain are minimal, including only mining fees. Therefore, compared with the brokers of stock exchanges, the exchange itself has lower costs when buying and selling cryptocurrencies.

So far, cryptocurrency exchanges remain relatively unregulated. However, there is support for strengthening the regulation of the cryptocurrency market. Only time will reveal the nature of the rules and regulations applicable to cryptocurrency markets.

In general, the above details the main differences between stocks and cryptocurrency exchanges. The initial goal of cryptocurrency is to make it an acceptable payment method one day, such as cash or credit card. Although this has not yet happened, people are increasingly interested in cryptocurrency, and many regret not investing in it earlier when the price is lower.