Financial investors generally tend to consider stock traders and stock investors to be the same, performing similar functions when it comes to trading. However, it is to be noted that both the stock traders and investors are different. Trading of the equity securities of a company falls under the purview of the stock trader, whereas it is the task of the stock trader to put into use their funds to buy those securities.
Curious to know how stock trading and Bitcoin trading vary from one another? Don’t look further. To help you have an overall better understanding, this article covers every important aspect regarding the similarities and differences between stock trading and Bitcoin trading.
If we talk about stock trading, this particular form of trading is known as buying and selling the shares of a specific company. If a person is known to own some shares of a particular company, it is deemed that they own a proportion of a company. It may require many years’ experience to understand the approach and gambit of stock trading and securing an investor’s portfolio.
Alternatively, when it comes to trading in Bitcoins, the transactions usually take place without any intermediary such as banks or the government. Satoshi Nakamoto expressed the need for Bitcoin as a mode of an online transaction system built upon cryptographical pieces of evidence rather than trust. Read on to know further the differences between stock trading and Bitcoins.
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Differences between Stock Trading and Bitcoins
Process of buying Bitcoins and Shares
In cryptocurrencies such as Bitcoins, trading takes place in the form of purchase and sale of virtual currencies. These are the assets which initially are purchased with the local currency after which the investors initiate the procedure of trading and earning profits.
On the other hand, when it comes to any financial firm’s shares, they have to be listed and traded in the primary market. After this, these securities and bonds are exchanged among the different investors.
Volatility
Stock trading Markets are regarded as a more stable, more accepted capital market having a diverse variety to offer to the investors. The returns or the gains earned from the stock exchange are comparatively easy to track.
On the other hand, Bitcoins are considered a lucrative investment option to attract numerous investors. Investments in Bitcoins are highly volatile, ensuring quick returns on the investments made.
Centralized or Decentralized body
The stock trading market is regulated by a centralized authority such as the Reserve Bank of India or Securities and Exchange Commission to avoid fraud or theft. On the other hand, Bitcoins are decentralized virtual currency, where the exchange takes place without any third regulatory body such as a bank.
Similarities between Stock Trading and Bitcoins
Method to Earn Money
Whether trading in stock markets or cryptocurrencies such as Bitcoins, earning money is the main aim. One can earn money by selling or buying stocks or exchanging or transferring Bitcoins.
Depend on the Market
It is observed that both the stocks and Bitcoins operate as per the market scenario. The sooner the stocks and the Bitcoins are exchanged, the higher are the chances of increasing the profits. An investor could trade for the stocks or the Bitcoins by paying the value of the ongoing bid rather than waiting for the higher bid.
Risk Factors-
It is quite understandable that stock and Bitcoin trading is often subjected to market risks. Hence before initiating the trading in either of them, it becomes essential that the person has complete knowledge about the workings of the capital market.
Trading platform
Frequently, it is observed that trading in the stock exchange and Bitcoins works efficiently when the platform is online. It is a known fact that Bitcoins trading is always online. One fine example of a reliable online platform is cryptocurrencies
Conclusion
Though both Bitcoin trading and stock trading are lucrative means to earn funds and an excellent option to invest funds, one should be very careful when dealing with these trading options. As high risks are associated with these investments, one should tolerate bearing risks and go by the market trends while making investments.