Why you should not compare the Bitcoin market to Stock market

Why you should not compare the Bitcoin market to Stock market
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In many cases, people try to compare the cryptocurrency market to the stock market. In my opinion, this should not be done because stocks are in a different level than the cryptocurrencies. Comparing them is sometimes essential, but these two have a wide range of differences that make them so different.

The stock market, for instance, is not as highly volatile as the crypto market. They are more regulated and mostly insured than the crypto market, and gives you a chance to be part of the ownership of a company, unlike cryptocurrencies that are mostly independent of the parent company, example XRP and Ripple.

Cryptocurrency market is less regulated compared to the stock market. Some regulatory bodies still argue whether the cryptos are commodity or security. Most of the cryptocurrency exchanges are not regulated and does not provide enough information for investors to make a decision. Stock market prioritizes regulation and ensures that there is a control of fraud and abuses.

Financial Industry Regulatory Authority (FINRA) and the U.S Security and Exchange Commission mostly regulate the stock market to ensure that there is enough information for investors to make a decision. Coinbase and Gemini are the known cryptocurrency exchanges that have insured their service. By law, all stock traders are required to insure their stocks in the U.S.

When you buy a stock, you buy a part of the company. In other words, you gain ownership of the company and gain voting right to make decisions. However, buying a cryptocurrency does not give you any voting right or the opportunity to be part of a company producing anything as Warren Buffett said. “If you buy something like bitcoin or some cryptocurrency, you don’t have anything that is producing anything.”

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To him, buying cryptocurrency means waiting for the next buyer to buy big which he classified it as “not investment.” Buffet may be right or wrong, but a majority of the cryptocurrencies out there is separated from the parent company. When Ripple shuts down, XRP which is the currency will continue to exist.

Stocks are backed by real companies and revenue base. This is so different from cryptocurrencies. Most of them were created out of joke like Dogecoin. Their prices, however, manage to surge due to speculation. The stock market seems to be more secure, real and recognized by law as compared to cryptocurrency which is facing numerous crackdowns in some selected countries. They are never the same.

What's Your Thought On This?, Let Us Know In the Comment Section Below.

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