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Stocks and cryptocurrencies: the main differences in trading

Institutional investors are increasingly looking towards cryptocurrencies. All of them have experience with classic trading exchanges, but such knowledge in the plane of digital currencies have virtually no value. Why? All because of the features of cryptotrading and its differences from standard financial assets. In this article we will look at the difference between stocks and cryptocurrencies.

STOCKS AND CRYPTOCURRENCIES: VALUATION

In this case, shares and cryptocurrencies are quite similar, because their value depends on how much they are willing to pay for them. For example, if a share has a value of $ 100, but someone decides to sell it for $ 1000 and there is a buyer for such a deal, the share price will soar to $ 1000. The same principle works in cryptocurrencies.

STOCKS AND CRYPTOCURRENCIES: DIVIDENDS

In the classical economy, almost all successful companies pay dividends to their shareholders. Yes, their volume does not exceed a few percent of the total shares, but this practice is considered normal. In the cryptocurrency environment, the concept of dividends is absent. Of course, there are separate projects that also pay refunds to their depositors, for example, Cucoin, but these are only isolated cases.

STOCKS AND CRYPTOCURRENCIES: INSIDER TRADING

The industry of trading shares on the classical exchange is very strictly regulated. The set of rules sets out how a trader can behave and how not. In accordance with these restrictions no institutional will trade cannot use insider information for profit. There are no such rules or prohibitions in cryptocurrencies.

For a better understanding of the situation, consider a small example. Suppose that there is a company GS, which on Wednesday plans to release a truly revolutionary technology on the market. This is highly likely to lead to the fact that its shares will rise sharply. But there is a trader Vitalik, who on Monday managed to find out information about the upcoming release. If he buys shares in the company, he'll be held accountable. If the GS company issues tokens and the trader buys them, then nothing will be done to him.

STOCKS AND CRYPTOCURRENCIES: REPORTING

Public companies in the classical market are obliged to prepare and publish reports on the results of their activities. This information will allow investors to assess the effectiveness of its work, as well as to predict future deposits. In ICO, which belong to the crypto-currency industry, such requirements do not exist. Of course, this simplifies the life of the companies themselves, but significantly increases the risks for investors and makes it difficult to choose an asset for deposits.

STOCKS AND CRYPTOCURRENCIES:

Stock markets do not operate around the clock. Their working time is limited to the daytime, and you will not be able to open a deal on the weekend. Accordingly, traders have the opportunity to calmly analyze their own transactions and plan the subsequent trading strategy.

The cryptocurrency trading market operates 24/7. This creates an additional burden on traders and introduces an endless mode of trading, when viewing the charts can be carried out day and night.

CONCLUSION

Shares and cryptocurrencies have a lot of differences. The first type of asset is more suitable for those who like a more measured trade with less risk and better predictability. Cryptocurrencies are characterized by high risks due to high volatility, as well as higher market activity, although they can bring more income.