The Capital
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The Capital

Crypto Vs. Stocks: The Similarities and Differences

In this article, we review the similarities and differences between crypto and stocks.

Trading is one of the many ways to pursue financial independence. While stocks have been around for centuries and have achieved a certain status of reliability, cryptocurrencies are relatively new. Both of these assets are a great option to invest in and grow ones wealth. However, investors need to choose a market based on their goals, preferences, experiences, and knowledge of trading markets.

Even though the crypto market is young, it is attracting substantial investments from people around the globe. According to a CNBC survey, more than half of millennial millionaires have already invested at least 25% of their wealth in cryptocurrencies. In this article, we review the similarities and differences between crypto and stocks.

Similarities between crypto and stocks

Even though the crypto market and stock market share many differences, there are a few similarities too:

  • Both are continuous auction markets.
  • In both crypto and stock markets, demand and supply are the value drivers.
  • The risk of loss is always present in both markets.
  • Both markets are available on digital platforms and allow traders to perform instant trades.
  • The price action of speculative crypto coins is similar to that of penny stocks.

Differences between crypto and stocks

Cryptocurrencies and stocks serve different purposes in a portfolio and investment strategy. Let’s look at some key differences between crypto and stocks.

Assets traded

The type of asset is the primary difference between crypto and stocks. Stock exchanges trade stocks and shares of a company, whereas cryptocurrency exchanges trade cryptocurrencies such as Bitcoin or Ethereum.

Stocks or shares represent equity in a company. When an investor buys shares of a company through the stock exchange, he becomes a partial owner of the company itself. The performance and efficiency of the company determine the value of your shares. On the other hand, the purchase of a cryptocurrency, whether it is a crypto coin or a crypto token, does not represent partial ownership of the company that created the digital currency. And while cryptocurrencies are easier to own than stocks, their value is subjective.

A publicly-traded company will issue shares at its will to raise money, and it is subjected to local laws and company regulations. On the other hand, most cryptocurrencies have a capped number of coins, and they are issued based on a predefined supply. As per basic economics, the value of capped cryptocurrencies would increase as their demand grows.

Maturity of the market

The stock market is more mature than the crypto market. Stock exchanges receive government backing as they follow local laws and regulations. Companies also provide transparency to shareholders by making market activity, financial updates, and minutes of general meetings public.

Stock exchanges have high volumes and diversity of trade. This provides more opportunities for some traders to dominate trading circles, with access to lower fees or commissions to trade. As a result, smaller investors have a disadvantage in the stock market when compared to bigger investors.

The crypto market is still young and still in the early stages of development. Most of the activities of crypto exchanges do not come under local laws and regulations. Considering the short history of the crypto market, it has less volume and maturity compared to stock exchanges.


Market volatility plays an important role in any trading market. When volatility is low, the market will be stable, and investors will have to wait for a long period of time to see financial rewards. This is typically what we observe in stock markets. Large trade volumes increase the stability of stock markets, which makes them less prone to the movements of ‘big fish’ trades. However, geopolitical events often impact the stock market because of its connections with governments across the globe.

Cryptocurrency exchanges experience greater volatility when compared to stock markets. Since the crypto market is young, its highs and lows are more pronounced. As a result, the crypto market is vulnerable to the trade movements of ‘whale’ traders. Trade decisions of a whale or someone who is heavily invested in an asset impact the whole market.

Market reach

Starting with stock trading can be time-consuming and energy-intensive. Beginners need to find a broker and get the approval to buy and sell stocks. The market reach of the stock market is limited, and trading is restricted to business hours.

With cryptocurrency, investors can trade cryptocurrencies any time of the day, irrespective of public holidays and major events. The crypto market is much more accessible to people of all social standing than the stock market. Starting crypto trading is also a simple and more straightforward process than trading stocks. Since the crypto market stays open 24 hours a day, there are swift trade movements.

Fees and regulations

Stock exchanges are heavily regulated marketplaces. They follow rules and regulations to protect traders and investors, whereas cryptocurrency exchanges face relatively few rules and regulations imposed by governments. However, many industry leaders and experts in the space vote for increasing regulation of the crypto market.

In addition to rules and regulations, both of these markets share differences in fees. The transaction costs and other fees charged in the stock market are relatively high compared to crypto markets. Stock brokers charge commissions, banks will charge translation costs, and capital gains are taxed. Cryptocurrency exchanges often have lower costs for buying and selling digital currencies than brokers and stock exchanges.

However, the common goal of an investor or a trader is to make the most of their investments and receive significant financial rewards, whether it is a stock market or crypto market. Investors need to choose one based on their experience and understanding of the trading markets.

Bottom Line

Most importantly, there is no right or wrong answer when it comes to choosing between crypto and stocks. Investors need to choose one based on their experience and understanding of the trading markets.

However, investors should never put all their eggs in one basket. The best option is to diversify your investment portfolio by investing in a range of assets. A balanced portfolio will provide a financial safety net in case of a crisis.

Read more about how to Diversify your portfolio in our blog here

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