Crypto vs. Stock Market: the battle that has sparked a heated discussion that which is a better investment to earn profit. The start of the third decade had the word ‘crypto’ in the air. Even though people might not possess information about Blockchain technology, one common thing that they knew was Bitcoin. It’s not astonishing when so many influential people are now brand ambassadors of cryptocurrency exchanges. Looks like crypto trading is easily adaptable by a majority of Indians.
But before that, have you questioned yourself what is cryptocurrency? Or how does that even work? Well, to answer your questions. Cryptocurrency is a digital currency that is used to buy goods or as an investment vehicle. It is decentralised and a perfect example of offering secure transactions with low fees. Focus on the word ‘investment’ because Bitcoin alone has given 230% of annual returns in the last 10 years!
Bitcoin is a real winner
That’s a lot compared to the FD returns of just 5-6% in a year. Cryptocurrency is digital assest, which means you do not have its physical existence. It came into the picture in 2009 by an anonymous identity named Satoshi Nakamoto who first led the foundation of Bitcoin. Well, all cryptocurrencies work on the concept of Blockchain Technology.
In layman’s terms, Blockchain is a chain of blocks that holds information within it. Precisely, it is a database of blocks holding transactions, that is decentralized, distributed, and immutable in terms of security. The craze for buying cryptocurrencies is at its peak where many individuals even look for Cryptocurrency Trading on centralized exchanges. However, after listening to the word ‘trading’, one thing that pops into our mind is Stock Market.
Stock Market – An ocean of opportunities?
Stock Market is not new in the game. It had its presence since 1875 with the name of Native Share and Stock Broker’s Association. As of now, India has more than 23 share markets in various parts of the country. The major of them are BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).
These two exchanges have a majority of companies listed. Reliance, Tata, Indigo, etc. are the companies that process transactions worth crores daily. The SENSEX (BSE30) is a major stock market index that tracks the performance of 30 major companies listed on the Bombay Stock Exchange. These companies are chosen based on liquidity, trading volume, and industry representation.
If we talk about the financial year 2021, a total of over 7,400 companies were listed in the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) across India. This included 5400 companies that were listed in BSE while the rest were on NSE. However, there is a decrease of 183 companies compared to 2020.
What Do you Mean by the Term Crypto Trading?
Cryptocurrency trading is the buying and selling of underlying digital coins via a trading exchange. Just as we buy shares of a company in the Stock market, cryptocurrency exchanges facilitate buying of coins. However, there are a host of differences when we talk of these two terms.
Crypto vs. Stock Market – Let’s Understand the Difference
BuyUcoin aims to unravel some underlying similarities and distinctions between Crypto vs. Stock Market to make things easier for investors.
- Market Timings
A very crucial aspect is timings. This allows you to choose your preferred timings and trade in that hour. Stock Markets open from 9:15 AM to 3:30 PM from Monday to friday. The market is off on weekends and at major festivals. On the contrary, the cryptocurrency market never sleeps. It works 24*7 where you can even trade in the midnight, early morning, afternoon, or evening.
- Trading Platforms
The cryptocurrencies can be traded on decentralised as well as centralised exchanges. There is no barrier to what exchange you choose. However, stock market shares is trade on centralised exchanges like BuyUcoin, etc. This involves a risk factor as your money is in the hands of these exchanges and you do not have full control over them.
- Upper Circuit and Lower Circuit
Another barrier is the circuit that holds the value of shares in the stock market. Each company’s share has an upper and lower limit barrier to hold the value of that share. They are usually stand at 15% of the open price. However, this is not the case with cryptocurrencies. They can zoom to 200% in a day while may even lose 80% on the same day.
- Trading in Fractions
Cryptocurrencies have an edge over this. They can be purchase in fractions such as 0.00004 BTC or 0.009 ETH. This allows you to even invest in cryptocurrencies that have high prices in the market. However, it is not the case with the stock market.
- Yield Farming
This allows you to stake your cryptocurrencies in the liquidity pools for guaranteed returns. This provides a double benefit where your value appreciates as well as you earn interest in it. However, there are no such concepts with the stock market that help you to earn better returns over your shares.
- High returns
If we talk about returns, they are speculative in the stock market as well as the crypto market. Some stocks rose to 10X in a year while some cryptocurrencies have even zoomed to 100X in a month. This purely depends on the company/cryptocurrency and also on several factors.
Conclusion
Trading in cryptocurrencies has a lot of perks compared to trading in the stock market. In the digital world, people are looking at speculative returns where millennials are eyeing cryptocurrencies more than the stock market these days. However, this paradigm shift is difficult to take for the generation of people who have all their life seen the movement in stock prices.
Frequently Asked Questions (FAQs)
Q1. What is cryptocurrency trading?
Ans. Cryptocurrency trading is the buying and selling of underlying coins via an exchange. You can also choose to opt for leverage and maximise your returns by going ‘long’ or ‘short.’ However, your capital is at risk when you opt for leverage and could result in losing all your funds.
Q2. Which is the best cryptocurrency for investing?
Ans. There are thousands of cryptocurrencies to invest in right now. The returns vary on a lot of factors while you may also experience volatility in the market. Hence, we advise you to do your own research (DYOR) before investing and only invest that you can afford to lose.