Cryptocurrency has opened a vista for investors all over the world. Bitcoin’s bull run generated hype, big enough to attract trading activities from different countries worldwide. Today there are more than 100 million traders.
The crypto market has expanded substantially in the past few years. Today there are more than 6500 cryptocurrencies. Bitcoin is still the most valued cryptocurrency, but other altcoins like Ethereum, Litecoin, and Ripple are emerging as potential rivals to Bitcoin.
With the proliferation of trading platforms and applications like bitcoin champion, new traders can trade in crypto with fiat money. In-app features like automated trading and market trend estimation allow traders to purchase and manage their crypto assets without hassle.
The stock market has always been the frontier of trading activities. Cryptocurrency’s emerging markets may affect the topography of trading across the world. Is it possible to trade crypto on the stock market? To understand this question, we need to understand the nuances of crypto and the stock market.
Significant differences between crypto and the stock market.
- To register in the stock market, a company needs to go through a formal verification process. Generally, the government audits the company to sanction it as a registered enterprise.
The Crypto market is different because the government or any authorizing agency does not regulate it. Cryptocurrency works on a decentralized ledger system.
- The reason behind selling company shares is primarily to raise funds. By selling shares, the company can increase the working capital required to run its ventures.
Cryptos, on the other hand, are considered asset class commodities because of their potential value hike. Crypto’s are primarily digital currencies used to overcome the shortcomings of the traditional ledger system used in banks. The price of crypto increases with an increase in demand (and blockchain activity). This is the primary reason why investors trade in crypto.
Cryptocurrencies may have different applications. The token in a network can be used as an in-game reward or support other decentralized applications, platforms, etc.If you plan to trade in crypto, you may consider its application so that you can speculate the growth of the currency.
- Stocks and crypto are both volatile assets. The crypto and the share market are highly speculative. The prices of shares and cryptocurrencies may rise or fall abruptly.
While both of the assets are volatile, the volatility rates differ. The Crypto market is more volatile than the share market. One of the major factors that affect the crypto market is the hype generated by word of mouth. We know the recent Bitcoin crash after Tesla CEO Elon Musk badmouthed it based on its negative environmental impact.
On the other hand, stocks are more stable as the company’s performance determines its value. It is easier to speculate about the stock market than it is to speculate on the crypto market.
Reasons why crypto and the stock market are incompatible:
Trading crypto via the stock market is not only impractical but also defeats the purpose of cryptocurrency. These are the reasons why these two markets are incompatible.
- Regulation: While the stock market requires registration and authorization by the government, the crypto market is unregulated and automated. To trade crypto via the stock market would require third-party (government) control. If the government regulates crypto, it would be functionally similar to the fiat currency that the government holds.
- Demand: Crypto has high market demand because this currency is deregulated. Multinational corporations like Tesla or PayPal have made investments in crypto networks because they offer faster and more efficient transactions at lower rates. Any third-party intervention will increase the rate of transactions rendering its decentralized ledger obsolete.
Conclusion: Satoshi Nakamoto conceptualized this peer-to-peer electronic currency to improve the existing transactional infrastructure of banks and similar financial institutions. If cryptos are regulated, then the entire purpose of the cryptographically secured blockchain, managed via computer algorithms, will be defeated.
