Since pre-historic ages, trading had been a common phenomenon between two groups, communities and individuals. We all had been reading about it since our school days. Trading dates back during the early stages when it was known as the ‘barter system’. You all must have read this in your history textbooks. With the change in civilization, aspects of trading too got updated according to emerging technologies like stock exchanges. But besides this, there is one more new phenomenon, which has gained much attention in terms of trading is crypto exchanges. Both these new terms share a common feature, and that is ‘trade’. Still, there is a difference between these two trading phenomena. So come let us explore the difference between crypto exchanges and stock exchanges in this blog.
The wave of Bitcoin has been the pivotal factor in generating interest among the people to buy cryptocurrency in India. Indeed, it faced criticism for its misuse for carrying illegal trading practices. But when people experienced its use in trading on various crypto exchanges, it overshadowed all those critics. However, today our main focus is on knowing the difference between crypto exchanges and stock exchanges, so let us stick to it.
Now to understand the differences between these two essential entities, you need to understand some factors which will sort out the distinction between the two. So let’s begin with:
Trading Of Assets
This point is enough to tell you about the difference between crypto exchanges and stock exchanges. When it comes to stock exchanges, it deals with trading in shares and company stocks, whereas, cryptocurrency exchanges as the name suggests, deals in
cryptocurrencies or currencies which are in digital form.
When trading of shares takes place on stock markets, it means equal rights in a company. So when shares are purchased through a stock exchange, it indicates your part ownership in that company. On the other side, when any crypto tokens or coins are purchased, it does not mean you share partial ownership with a company that issued the cryptocurrency. Here it all matters on the trading of cryptocurrency in terms of ownership.
Stock Exchanges Are Much Mature Than Crypto Exchanges
While exploring the difference between crypto exchanges and stock exchanges, there is one factor that clearly states the advantage of a stock exchange over cryptocurrency exchange. This factor is maturity. In comparison to crypto exchanges, stock exchanges are much experienced and mature form of trading. Here you can observe the backing of government behind it.
Not only this, but stock exchanges also fare better in trade diversity and high volumes. Because of this, some traders get ample opportunities in having control over trading circles. When it comes to crypto exchanges, it is still considered to be a newbie concept. It is free from regulation and intervention of central authorities like government. If you take a glimpse into its brief history, you will find the big difference in trading of cryptocurrencies which is much lesser in comparison to stock exchanges.
Factor Of Volatility
Another big factor, that clearly states the difference between crypto exchanges and stock exchanges is volatility. In contrary to former exchange, a factor of volatility is low in the stock exchange. It is because low volatility represents stability in the market and is less vulnerable to big traders which are often denoted as big fish. But in the case of cryptocurrency, it is not so. Whale traders often make it a target with their trade movements.
So the above following factors are enough to reveal the difference between crypto exchanges and stock exchanges. While exploring distinctions between the two exchanges, we found that stock exchanges are much mature than the crypto exchanges. But there are rules in the stock exchanges that determine safety for investors and traders. And with rules, there are also fees. The traversing costs linked with stock exchange is very costly. Charging fees or commission by brokers is expected here. Besides this, charges are also levied by banks on making payments. Crypto exchanges on the other side are free from regulation and incur minimal costs. That is why people find the easiest way to buy cryptocurrency