What are the differences of cryptocurrency and stock markets?

in #cryptocurrency5 years ago (edited)

View this answer on Musing.io

Cryptocurrencies are based on blockchain technology. Blockchain is a distributed ledger where transactions are recorded in immutable ledger and no one controls the blockchain as it is decentralized. People invest in cryptocurrencies in a hope to earn money as they expect its price will increase in future. However, buying cryptocurrencies does not provide a person the ownership of the company.

On the other hand one can buy or sell stocks and securities in the stock markets. When one buys shares of a company, one gets the ownership of the company to the extent of one’s proportion of the shares. Shares can be in physical or dematerialized form while cryptocurrencies are virtual currencies which can be used like traditional currencies. Stock markets are not based on blockchain technology and also their transactions are not recorded in the immutable, permanent, fast and secure digital distributed ledgers. 

More or less both are meant for investment purpose. However, governments allow stock markets to run freely and put many restrictions on crypto markets. Stock markets are highly centralized while crypto markets are decentralized. As far as user base is concerned crypto markets are very small in comparison to stock markets. Cryptocurrencies are new and have great potential but much depends on the governments’ attitude and needs of the future. 

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Dear @akdx

However, buying cryptocurrencies does not provide a person the ownership of the company.

That is not 100% true.

What you are refering to are ICOs (utility tokens). They indeed do not provide ownership of the company and most of them do not meet international standards and regulations.

On the other hand we have already few STO (security token offerings) launched lately. Mostly on Polymath (ST-20 standard). And those are very different. They not only follow KYC and AML standards and regulations, but they also provide investors with ownership of the company.

Those tokens are simply backed by real assets. so try to look as STO as digital version of stock market. With very low barier of entry.

ps. look up also at "tokenization of property market". This is new thing.

I strongly believe that 2019 will bring more trust and attention to crypto space, because of STO.

Yours
Piotr

I agree. Thank you dear for adding value to my answer.

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