If you’re heading into the investment world, crypto, a shortened term for cryptocurrency, might seem similar to stocks. However, Crypto and stocks share some exact mechanisms and have substantial differences. One fundamental distinction is crypto’s ability to serve as an alternative payment method.
We’ll go through the similarities and differences between stocks and crypto. However, the payment method part of blockchain fuelled digital coins, which also serve as assets for some companies, is the most glaring contrast.
Modern online payment methods
Blockchain technology is closely related to Fintech, and digital coins like Bitcoin, Ethereum, or Litecoin are considered notable financial tech exponents. To look at other modern payment methods, we can browse iGaming websites like the popular online casino NetBet platform, because gaming sites are at the forefront of almost everything new in financial transactions.
Online casino companies accept traditional credit card payments and accept e-wallets and intermediaries for immediate bank transfers. Some support Apple and Google Pay and increasingly cryptocurrency payments in the last couple of years.
How Crypto works
Crypto is a term that represents the secure cryptographic technology of blockchain that enables unprecedented security. Aside from an impenetrable shared blockchain, crypto avoids the need for a centralized governing body like a bank.
Prices of cryptocurrencies are highly volatile. Since their inception in 2009 with the emergence of Bitcoin, the historical graph shows constant growth, but there are periods of enormous ups and downs.
Some users mine their crypto coins, while many investors trade their value on cryptocurrency markets. In addition, some notable global companies invested their wealth in cryptocurrencies as part of their asset management.
What sets stocks apart
Stocks are equivalent to a fraction of the company enlisted on the stock exchange. You literally own a small part of the company with stock or shares. If that enterprise works well, the value of the stock rises. You can sell it for profit or get a share of the company’s profit via the dividend.
The stock market is also volatile but far less than crypto. It is also heavily regulated and under the constant scrutiny of lawmakers. The trade volume is still on the stock side, but the crypto market is getting there fast. The Crypto market is still without strict regulation, with governments having a tough time creating a legislative frame around decentralized coins/assets that don’t require a centralized spot for trade.
Buying stuff
Stocks are tradeable, but you can’t use them for purchases. On the other hand, the philosophy behind crypto strives to make it an alternative to real money, but many investors look at crypto as an asset worth trading because of its high value.
You can buy a portfolio of cryptocurrencies and hold them until the value rises. But at the same time, you can buy a car or groceries with your Bitcoin, making crypto a valid payment method.
Another blockchain tech emerging and creating disturbance across financial markets and other industries like gaming is NFT. Non-fungible tokens allow selling and owning digital assets like art or items from the metaverse and games. Although it will be exciting to watch, will NFT become a new asset mentioned in the same sentence as digital coins and stocks?
Source: https://www.cryptopolitan.com/is-crypto-just-stocks-or-does-its-value-as-an-alternative-payment-method-set-it-apart/