When Bitcoin first arrived on the scene in 2010 as a revolutionary new paperless method of conducting peer-to-peer payments that cut out the "middle man," it was similar to how any business starts with the goal of giving value to someone, presumably at a profit to that firm.
Neither was created with the intent of luring investors, much less being "sold" as a financial asset.
The oldest type of stock trading started in the late 1500s, and the East India Dock Company issued the first paper shares in 1602.
The value of the assets traded on the stock market is around $500 trillion and above (approximately).
In 2021, the cryptocurrency market peaked at $3 trillion.
When you consider that the cryptocurrency market is just 12 years old, it's no small achievement to have reached a market valuation of that scale so rapidly. That sum may seem little in comparison to the stock market.
A number of highly intriguing comparisons between the cryptocurrency market and other assets have been made by NGRAVE.io.
Learn more about Crypto Trading Vs Stock Trading at Investment Mastery.
Its results from January of this year included:
- The global real estate industry is estimated to be worth $340 trillion (give or take), with commercial real estate accounting for 10% of it ($34 trillion), as opposed to the $2.35 trillion market valuation of cryptocurrencies.
- Despite being not a million miles away from the U.S. stock market ($50tn) or the worldwide equity market ($122tn), the global equity market is the next largest to the cryptocurrency market cap.
- The comparison between the cryptocurrency market and the top three global companies (Alphabet $2tn, Microsoft $2.51tn, and Apple $2.98tn) becomes quite intriguing.
- The worldwide cryptocurrency industry is almost as valuable as the greatest IT companies in the world, and bitcoin, the market leader, did so considerably quicker than those companies, reaching a $1 trillion market worth in 2021.
- In actuality, it took 12 years instead of 24 for Amazon to accomplish the milestone.
- It's also important to note that Ethereum, the second-largest cryptocurrency, has a greater market valuation than Procter & Gamble, Samsung, LVMH, Wal-Mart, and LVMH.
- These statistics demonstrate that both markets are valuable, and considering the relative youth of crypto, it is obvious that the crypto market is here to stay.
- If you have any knowledge of crypto vs stock and digital currencies, the major distinction is rather obvious—stocks come from the real world, whereas cryptos only exist in the virtual realm of the internet.
Furthermore, if you hold stock in a firm, you effectively possess a "share" of that business.
You don't possess stock in the corporation that issued the cryptocurrency when you buy it; instead, all you have is the digital coin or token.
- Regulation is still another significant distinction. As stated in the introduction, the stock market has been around for more than 500 years. Regulations at the time grew increasingly stringent and sophisticated as it developed into the London Stock Exchange and later the New York Stock Exchange in the late 1700s.
The main draw of cryptocurrencies is the absence of government control on the blockchain they run on. Decentralizing control and removing oneself from authority and the status quo are key concepts.
Since its launch in 2010, Bitcoin, cryptocurrencies, and blockchain have been derided as a fad or dangerous by major financial institutions and the government. However, in the last year, with 6000 different coins/tokens on the market, this has changed drastically as the mainstream has begun to get involved and impose rules and regulations.
- Market fluctuations are still another significant distinction between the stock and cryptocurrency markets. The term "volatility" is used by analysts to characterise market movements.
Basically, the cryptocurrency market is extremely unpredictable, and a coin's price may change substantially in only a few hours, whereas the stock market normally has moderate volatility, making it fairly steady day to day.
- Market trading hours is related to regulation and represents yet another important distinction between stocks and cryptocurrencies.
The stock market, which is only open during "working business days," really closes every day. In contrast, the stock market vs cryptocurrency market is opening around-the-clock, every day of the year.
In actuality, this explains the aforementioned volatility. Since there are no time-of-opening restrictions, the cryptocurrency market is constantly active and moving even when the actual trading floors are quiet and empty.
Thus, anyone may buy, sell, and invest in cryptocurrencies. You are not need to wait for your broker to be awake and trade on your behalf.
This explains why younger generations are more likely to trade in cryptocurrencies than more experienced traders who may not trust or even grasp the technology as readily.
- Fees are a prevalent factor in trading and investing on both the stock market and the cryptocurrency market.
The number and scope of these levies, however, vary greatly.
Depending on whom you are trading with and their rates, you might anticipate paying a variety of fees when you trade on the stock exchange.
For instance, banks will charge you to make payments to them, brokers may charge a fee or commission, and capital gains are taxed.
Cryptocurrency costs have always been minimal and continue to remain so. This is because trading on cryptocurrency exchanges has substantially lower expenses than other forms of trading because a lot of it is automated.
The same is true of the fees that cryptocurrency exchanges and blockchains themselves experience when buying and selling cryptocurrencies.
Conclusion
It is reasonable to predict that in 2022, investors and traders will find the stock market and the cryptocurrency market to be equally attractive due to their high asset values and potential for large profits.
Despite this, there are inherent distinctions between the two markets that may influence where you place your money. Or perhaps you'll see the importance of both marketplaces and combine the best aspects of each.
Diversification is, after all, the secret to any investor's success.
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