Era of E-Commerce: Crypto vs Stock
By Abhishek Kumar on The Capital
Blockchain and the stock market had brought about a revolution in the era of e-commerce as they hold the power of changing the business dynamics. There was a time when trade was all about importing and exporting goods but one has better options today. There was a time when the stock market used to rule the industry but ever since the introduction of crypto technology the market is diverted, But which one is better?
For the definition “Stock Market is a place where shares of public listed companies are traded. The primary market is where companies float shares to the general public in an initial public offering (IPO) to raise capital.” Thus, it is the meeting place of the stock buyers and sellers to buy or sell the shares. On the other hand, Crypto is a distributed, decentralized public ledger. It has many applications but Bitcoin mining is quite a famous one.
Pros and Cons
Advantages of Bitcoin:
One-to-one transactions affairs
Asset Transfers i.e completed at specific date or time
No Transaction Fees only external fees to engage third party is involved
Strong Security
Individual Ownership
Advantages of Stock market:
High returns on long term investment
Easier access to capital as because of big market
Higher securities on transactions
Companies listed on a stock exchange are much more recognizable and preferred
Disadvantages of Bitcoin:
Exposure to Scams and Fraud
Black Market Activity
Susceptible to High Price Volatility
Bitcoin mining consumes vast amounts of electricity
Disadvantages of Stock-market
Risk, as you could lose your entire investment. If a company does poorly.
Stockholders paid last, Preferred stockholders and creditors get paid first if a company goes broke.
High Variations as stock prices rise and fall second-by-second.
Professional competition , Institutional investors and professional traders have more knowledge to invest.
Investors anxious about the stock market might be looking for alternatives, like Bitcoin or cryptocurrency. When considering cryptocurrencies, though, it’s important to appraise your overall portfolio goals and risk tolerance. Investments carry risks the market could crash anytime for various reasons. Companies could go bankrupt or stock could soar over time. Predicting risk is essential. While there are substantial controlling and financial costs associated with the listing on a stock exchange, the advantages outweigh the disadvantages.
Though we can’t base future performance on the past, it’s useful to take a look at how different investments have fared over time.
History Stats of Stock and Crypto
In 2015, Bitcoin’s price fluctuated between $200 and $500 per coin. However, during 2017, the price suddenly reached a high of $19,891 in December, before dropping below $3,500 in December 2018. In 2020 alone, Bitcoin’s price has bounced between $3,858 on March 12 and $9,074 on July 5. Stock growth hasn’t been that dramatic; it’s been more stable since 2015 at right around $2,000 in early 2015. While there have been ups and downs since then, the S&P 500 is around $3,100 as of July 2020.
“Bitcoin has been volatile since it was created since there was no natural way to value it,” Chisholm said.
“It went to $20,000 because everyone was hearing the news and people didn’t want to miss out. Then it went to $3,000 and now it’s almost back to $10,000.”
Whereas, stocks even though there are ups and downs and some volatility in the short-term, there’s more long-term and historical support.
Chisholm said, “That expectation isn’t there for Bitcoin. Because stocks are more established and expected to do well, they have been historically supported.”
One event that shocked Bitcoin investors and enthusiasts in the past month is the sudden crash of the value, in sync with massive price declines in global stock indices, from around $9000 on 7 March 2020 to about $5000 . The event disproved the hypothesis that Bitcoin may serve as a safe haven for investors.
Lastly not everything about blockchain has been positive. The new technology also gives rise to legal and stability challenges, which governments and the financial industry itself will overcome with time. The implementation of blockchain could also bring risks of dependability and maintaining security standards. An instance of China’s Shenzhen Exchange has had to crack down on companies that are misleading investors by associating themselves with “blockchain technology” even though the companies had little or nothing to do with blockchain. Whereas the Stock market also has a large market and is widely accepted.
