5 Key Differences Between the Stock Market and Cryptocurrency

in LeoFinance2 months ago



With the uprising of a bold and unwavering reddit group in the Wall Street scene and all actions that have come after from the ones who supposedly control the market, we have quite a peculiar financial situation on our hands. Some of those actions are more questionable than others. Like Robinhood, the application, not being very much like its folklore counterpart. As I far I remember his slogan wasn't blocking the poor to protect the rich.

This raises some interesting questions and perspectives. Stuff to think about in the current financial environment in which we try to maneuver ourselves into the best positions possible. One of those questions is "what are the differences between the stock market and cryptocurrency". I recently had to ask myself this as well, before all this madness happened, because I was/am considering to enter the stock market. In that process I've identified some key differences.

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When you buy a stock you are practically buying part ownership of the company and given a certain majority you can decide what happens and what doesn't happen in that company, depending on the company structure and setup. With crypto this is a bit different. You don't actually own a part of the company or project. But you are in essence a stakeholder, driving the incentive for any type of dev team to deliver accordingly.

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Legalities and Speed of Transactions

Because of the ownership and regulations by law that define the behavior you're allowed and the way your transactions are validated, buying and owning a stock involves more steps than buying cryptocurrency. If you have the necessary tools, you can have crypto in under 10 minutes transferred to your wallet. This is not the case in the stock market with all the middlemen and paperwork attached to the system. A benefit of regulation in the stock market compared to crypto might be that your potential loss is also regulated by the system, while a crypto exchange that defaults might not have to reimburse your funds, depending on the law.

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Due to regulations and laws and control by the big dogs getting into the stock market is a bit more difficult to get into by a commoner. The complexity and politics might also play a role in this. Meanwhile anyone anywhere can get into cryptocurrency without much limitations other than having a good laptop and internet connection. Trading on and signing up for exchanges is another story of course.
To buy stocks locally, for example, I have to go through a registration process with a thesis worth of documents I have to provide. Meanwhile I can create a Hive account as I'm writing this blog and start earning immediately.

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Decentralized versus centralized

Accessibility of cryptocurrency also stems from the fact that blockchains are by definition decentralized and therefore not bound by geographical limitations, while stock markets are centralized and usually bound by country borders and the laws that apply, making it much more difficult for me to buy a GameStop stock compared to someone who resides in the US.

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Censorship? And also Data Manipulation

Blockchain data is immutable. This is one of the key aspects that sells the concept of this revolutionary technology. This means that any type of transaction platform or exchange can not have it's core data be tampered with. If those google reviews of Robinhood where on the blockchain, we would still have access to them right now. Google could still filter data that appears in the UI, but the data would be there if needed. The use of centralized UI or centralized servers on crypto exchanges is no different in this matter. Exchanges have full control to regulate the behavior of deposits and withdrawal activity. As long as this doesn't change the trading game is still in danger. I think that exchanges that utilize a wallet like Metamask directly for swaps or transactions are a step closer to the solution.


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I would add - fundamentals. We have objective data for what a stock/company is doing. We have no idea what each coin and their team is doing.

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In the projects that are well put together they are run like companies, with clear roadmaps and data. But not all projects and coins have this other than maybe an whitepaper, so I get what you mean.

We still don't get financials, where exactly money is going and so on. Roadmaps are if we're lucky but we still don't know how every dollar is spent and allocated.

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Ah yes. Agreed. I overlooked that part.


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