Crypto vs Stocks

What is the difference between Cryptocurrency and stocks?

The original goal for the creators of Cryptocurrency, was for Crypto to one day become a currency that is as commonly accepted as cash and credit. Many people now associate Cryptocurrency with stocks, even though they’re completely different.

Let’s take a look at some of the differences between Cryptocurrency and stocks. You can use this information to learn more about Crypto, but it’s not financial advice and you should consider talking to a professional advisor of your choice before making important financial choices like buying or selling Crypto.

Difference: What you own

When you buy Crypto, you own a certain amount of that digital currency. Someday it may be possible to use Crypto in transactions as easily as other currencies, but today it’s primarily a store of value that you can hold onto or sell. By comparison, stocks are offered by companies as equity or ownership in that company.

Difference: Volatility

Both Crypto and stocks can go up and down in value, so buying either one involves risk. However, Crypto has gained a reputation for sudden and drastic changes in value that can happen without warning. Stocks, on the other hand, are directly linked to companies that must publicly and regularly share how they’ve been doing and how they expect to do in the future. Investors can use that information to make informed decisions.

Difference: How they’re governed

Federal agencies like the US Securities and Exchanges Commission (SEC) have authority over the entire stock market to protect fair trade. In contrast, as of now, there is no central authority regulating the Crypto market. For each unique Crypto, governance is distributed among those involved with growing and maintaining its technology.

Difference: Hours of operation

The Crypto market runs 24/7, 365 days a year. You’ll see the price of Cryptocurrencies change even as the clock strikes midnight on New Year’s Eve. The stock market works full time Monday through Friday, but takes nights, weekends, and designated holidays off.

Advantages of stocks

• Common shares are the most (you guessed it!) common type of equity investment for Canadian investors. They can offer:
• Capital growth. The price of a stock will go up or down over time. When it goes up, shareholders can choose to sell their shares at a profit.
• Dividend income. Many companies pay dividends to their shareholders, which can be a source of tax-efficient income for investors.
• Voting privileges. The ability to vote means shareholders have some measure of control over who runs the company and how.
• Liquidity. Typically, common shares can be bought and sold more quickly and easily than other investments, such as real estate, art or jewellery. This means investors can buy or sell their investment for cash with relative ease.
• Advantageous tax treatment. Dividend income and capital gains are taxed at a lower rate than employment income and interest income from bonds or GICs.

Advantages of Crypto

• Inflation has caused many currencies to get their value declined with time. Almost every cryptocurrency, at the time of its launch, is released with a fixed amount. The source code specifies the amount of any coin; like, there are only 21 million Bitcoins released in the world. So, as the demand increases, its value will increase which will keep up with the market and, in the long run, prevent inflation.
• Governance and maintenance of any currency is a major factor for its development. The cryptocurrency transactions are stored by developers/miners on their hardware, and they get the transaction fee as a reward for doing so. Since the miners are getting paid for it, they keep transaction records accurate and up-to-date, keeping the integrity of the cryptocurrency and the records decentralized.
• Privacy and security have always been a major concern for cryptocurrencies. The blockchain ledger is based on different mathematical puzzles, which are hard to decode. This makes a cryptocurrency more secure than ordinary electronic transactions. Cryptocurrencies, for better security and privacy, use pseudonyms that are unconnected to any user, account or stored data that could be linked to a profile.
• Cryptocurrency can be bought using many currencies like the US dollar, European euro, British pound, Indian rupee or Japanese yen. With the help of different cryptocurrency wallets and exchanges, one currency can be converted into the other by trading in cryptocurrency, across different wallets, and with minimal transaction fees.