Stocks trading started around May 1792 when the market on Wall Street opened in the United States, it has become a global business activity. This has made it possible for people in different nations across the planet to trade in stocks and securities. The US dollar was the only acceptable currency to trade in stocks meaning if you were a citizen of the UK, China, or any developing country, you needed to get dollars to trade. This made it impossible for people in other countries apart from the United States to trade in stocks. The New York Stock Exchange is one of the largest stock exchanges with millions of traders and investors around the world.
The similarity between stocks and virtual assets is that they can either appreciate or depreciate. If the value is above the purchased price, the investor will benefit and if it falls below the price paid the investor will make a loss. Crypto prices can also increase or decrease depending on the market forces. Most investors will take advantage of the price difference to make a profit. As coins get more popular, investors and traders are gradually shifting their interest from stocks to trading coins.
They both have their advantages and disadvantages, it appears coins are gaining more popularity than stocks. A major difference between stocks and coins lies in their ownership, over 84% of stocks in the United States is held by 10% of a few wealthy individuals. Cryptocurrency is more like an open system that is not owned by any single entity or group of shareholders. Every participant has equal opportunity depending on the level of his investment. Stocks can be determined by regulations to ensure stability in the economy, this is not the case with digital assets like Bitcoin. Their prices are determined by invisible forces, that’s why Bitcoin can increase from $6500 to about $15900 within the same month.
A major challenge with coins over stocks is that the prices are very unstable, for instance, the price of gold and crude oil may never exceed a certain amount. If this happens, the government may step in to stabilize the system either by placing taxes to ensure trade restrictions. This is not possible with digital currency, that’s why most nations are having issues adopting it. The fact that the currency has absolute autonomy like being self-regulatory is a problem for some authorities. But that is how a decentralized system is meant to operate like a cryptocurrency, to have no government regulations.
Investing in blockchain technology is a new trend that many great investors and companies are beginning to consider. The opportunities are enormous and there are prospects that blockchain technology, which is the bedrock of cryptocurrency, is going to be the next phase for investment. Trading in stocks can be limited because people may be required to invest using dollars only but, with virtuals, there are more than a hundred different tokens that may become acceptable to trade in the Forex exchange market.
As a beginner, it is important to note the major difference between stocks and digital currencies. Stocks are physical assets whose value can be determined, they are legitimately backed by a company. Digital currency is not like that, they are cashless assets whose values can’t be determined by a single entity. While their prices are influenced by a network of users, it is important to note here that while stocks are issued, cryptocurrency can be created. This is where some authorities have a problem with virtual currency, the fact that anyone can create and run a blockchain makes it unacceptable to some.
Some investors would rather go for stocks because they can be predicted to a greater extent than cryptocurrency. Digital assets are somewhat unpredictable, and they fluctuate almost every second, making it difficult for participants to forecast the direction of trade. With stocks you may not need automated software to predict the market, there is always a range of prices within which stocks can't exceed. Looking at Bitcoin for example, there seems to be no limit, their price can go up to $25000 and even more depending on market activities. Although cryptos offer many benefits, their future is still uncertain compared to stocks, this makes some participants reluctant to increase their investment plans.