20+ Differences Between Cryptocurrency And Stocks

The concept of Cryptocurrencies and Stocks sounds pretty confusing, and both the terms are used interchangeably many times. A currency based on a blockchain system and secured through cryptography is known as Cryptocurrency or just Crypto.

On the other hand, stocks are shares that reflect one’s ownership in a corporate company. The significant difference between Crypto and Stocks is that the former is not governed by any public or private institutions, while the latter is. 

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Key Differences –

Cryptocurrencies –

  1. Cryptocurrencies are digital currencies that operate internationally and are the medium for purchase and sales. It is a currency. 
  2. One does not have to sit at particular timings to access cryptocurrencies. 
  3. There is no need to have middlemen like a broker or bank to have access to Cryptocurrencies. 
  4. One drawback of Crypto is that any governing body does not govern it. 
  5. Examples include Bitcoin, Stellar, Cardano, etc. 

Stocks –

  1. Stocks generally refer to shares of any company that denote one’s share in that particular company. 
  2. It is an investment. 
  3. Stock Market operates on a fixed timing, unlike Crypto. 
  4. To buy stocks, middlemen such as Brokers are typically involved. 
  5. One drawback of Stocks is that Stock prices fluctuate a lot and can cause one significant loss.
  6. Examples include stocks of Amazon, Facebook, Intel, etc. 

Comparison Between Cryptocurrency And Stocks

ParameterCryptocurrencyStocks
MeaningCryptocurrencies are digital currencies.Stocks are an investment that denotes one’s ownership in a company.
Speed of TransactionsCrypto Transactions are faster than Stock transactions.Stock transactions are slower than crypto transactions.
MiddlemenThere are no middlemen involved in Crypto transactions.Stocks transactions require middlemen such as Broker or banks.
GovernanceCrypto Market is not governed by any authority.Stock Market are completely governed.
AccessibilityCrypto Market is open 24/7.Stock Market operates only during fixed timings.
Anonymous UsersUsers can choose to go anonymous during buying or selling currencies.Users can not go anonymous during buying and selling stocks.
MisuseDue to its ungoverned nature, crypto is very easier to misuse for crimes.Stocks are rarely misused for criminal use.
TypesCryptocurrencies can broadly be classified into two categories, i.e., Coins and Tokens.There are fifteen types of stocks, namely Common Stock, Preferred Stock, Class A Stock, Class B Stock, Growth Stock, Value Stock, International Stock, IPO Stock, Large Cap Stock, Middle Cap Stock, Small Cap Stock, Blue Chip Stock, Penny Stock, ESG Stock, Cyclical Stocks and Defensive Stocks
RiskRisk involved in Cryptocurrencies is moderate to high.Risk involved in Stocks is low to moderate.

Major Differences Between Cryptocurrency And Stocks

What Exactly Is Cryptocurrency?

Currency means a medium of exchange. Years ago, when currencies did not exist, Barter System prevailed in our societies worldwide.

But Barter System was not a reliable medium of exchange. That is when Currencies were invented. Now, we have just gone one step ahead in our conventional currencies. 

Just like our conventional currencies, Cryptocurrencies are a form of money that operates at an International Level and exists on the Internet.

That is why Cryptocurrencies are also known as Digital Assets or Digital Currencies. These digital currencies are called “Crypto” cause Cryptography backs up these digital currencies. 

Since any central unit does not govern cryptocurrencies, how do Cryptocurrencies keep track of their transactions? The answer is through Blockchain Technology. This technology is the very reason Crypto exists.

It is responsible for maintaining track of all the Crypto transactions. Some of the most famous cryptocurrencies are Bitcoin, Ethereum, Tether, Cardano, USD coin, Stellar, Polka Dot, Dogecoin, Litecoin, Solana, etc. 

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Advantages and Disadvantages of Cryptocurrencies –

Advantages –

  1. Cryptocurrency transactions are very fast as compared to our traditional currencies’ transactions. 
  2. Cryptocurrencies make it possible for one to stay Anonymous in the digital Crypto world. 
  3. There are no middlemen involved in Crypto Transactions. 
  4. All of the Crypto transactions are recorded with the help of Blockchain Technology. 
  5. Crypto comes with a “Virtual or Digital Wallet” that helps keep currencies. 

Disadvantages –

  1. Cryptocurrencies are not governed; hence criminals widely use them for illegal uses. 
  2. These currencies are not legalized everywhere. 
  3. It is very easy to lose your digital wallet. 
  4. One can be vulnerable to cyber-attacks and scams. 

What Exactly Are Stocks?

Stocks refer to equity or a share of a company. People who own stocks are referred to as shareholders of a company. These stocks denote one’s share in a company.

For example, if there are 100 shares, and you own 20 shares, you have a share of 20 percent in that same company. A market where people buy and sell different shares of different companies is known as Stock Market. 

There are fifteen types of stocks, namely Common Stock, Preferred Stock, Class A Stock, Class B Stock, Growth Stock, Value Stock, International Stock, IPO Stock, Large Cap Stock, Middle Cap Stock, Small Cap Stock, Blue Chip Stock, Penny Stock, ESG Stock, Cyclical Stocks, and Defensive Stocks.

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Advantages and Disadvantages of Stocks –

Advantages –

  1. Buying stocks in a company means you are being a shareholder. Being a Shareholder, you get to have your opinion by voting on the major decisions of a company. 
  2. Stocks require only a little investment and help in growing that little investment. 
  3. To purchase stocks, one needs a broker and stock market. 
  4. It is very easy to convert your shares back into cash, i.e., by selling off them. 

Disadvantages –

  1. The prices of shares fluctuate vividly.
  2. Equity shareholders are the common shareholders, and if a Company is bearing a loss, only the preference shareholders are paid. 
  3. Investing in stocks is a timely and risky investment. One should have explicit knowledge before investing. 
  4. Investing in stocks requires a broker. And that involves brokerage fees. 

Contrast Between Cryptocurrency and Stocks

Meaning

  • Cryptocurrency – Cryptocurrencies refer to digital or online currencies that operate internationally and are made through blockchain technology. 
  • Stocks – Stocks are investments that denote one’s share of ownership in a company.

Kind

  • Cryptocurrency – Cryptocurrencies are currencies just like conventional means of money. 
  • Stocks – Stocks are a kind of investment. 

Types

  • Cryptocurrency – Cryptocurrencies are of three types. 
  • Stocks – Stocks are generally of fifteen types.

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Types of Cryptocurrencies –

  1. Coins – Crypto Coins are coins that operate on their blockchains. These coins are currency. 
  2. Tokens – Crypto Tokens, unlike Crypto coins, operate on other Coins’ blockchains. They do not have their blockchain. These Tokens are assets. 

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Types of Stocks –

  1. Common Stock – This is the most common type of Stock. The number of common shares one has, the numeral denotes his votes. 
  2. Preferred Stock – Only Some types of people have this type of Stock. A preferred dividend might be more than a common stock dividend.
  3. Class A and Class B Stock – Class A stock are only for a company’s close members, while Class B stock is for the general.
  4. Large Cap, Middle Cap, and Small Cap Stocks – These types of Stocks depend on the market capitalization of a company. The stock of companies with the highest capitalization are referred to as Large Cap Stocks, and those with the lowest are referred to as Small-cap Stocks. 
  5. Growth Stocks – Stocks of companies expanding their business at a higher rate than the surroundings are known as Growth Stocks. 
  6. Value Stocks – Stocks of companies on sale due to the changes in the stock market are known as Value Stocks. 
  7. International Stocks – Stock of International Companies are known as International Stocks. 
  8. IPO stocks – IPO stocks are the stocks of private companies that want to reach public markets by putting their stocks on the stock exchanges. 
  9. Cyclical Stocks and Defensive Stocks – Cyclical Stocks are stocks whose prices are affected by economic changes. Defensive Stocks are stocks that are not affected by economic changes. 
  10. Blue Chip Stocks – Blue Chip Stocks are those stocks that belong to large-cap companies that provide a good dividend and have dependable performance. 
  11. Penny Stocks – As the word suggests, Penny stocks are very cheap. These stocks belong to small companies with small market capitalization.
  12. ESG Stocks – ESG Stocks are a company’s stocks that adopt sustainable manners to protect the environment. 

Middlemen

  • Cryptocurrency – Buying and selling Cryptocurrencies do not require any middlemen. 
  • Stocks – Buying and selling of Stocks generally require middlemen in the form of a broker or a bank.

Governance

  • Cryptocurrency – Any authority does not govern cryptocurrencies. 
  • Stocks – Stock markets are completely governed. 

Access

  • Cryptocurrency – Crypto Market is accessible every second of the day. 
  • Stocks – Stock Market is accessible only during fixed timings. 

Speed

  • Cryptocurrency – Crypto transactions are faster than Stock Transactions. 
  • Stocks – Stock Transactions are slower than Crypto Transactions. 

Misuse

  • Cryptocurrency – Due to the absence of a governing body, criminals can misuse Cryptocurrencies. 
  • Stocks – Since Stock Markets are governed, the probability of misuse remains very low. 

Anonymous

  • Cryptocurrency – Users can easily stay anonymous while buying or selling Cryptocurrencies. 
  • Stocks – It is impossible to stay anonymous while buying or selling stocks. 

Risk

  • Cryptocurrency – Due to the absence of a governing body and the presence of purchases only in a virtual wallet, Cryptocurrencies have moderate to high risk. 
  • Stocks – Stocks have low to moderate risk due to the fluctuating nature of stock prices.

Example

  • Cryptocurrency – Some common examples of Cryptocurrencies include Bitcoin, Polka Dot, Dogecoin, Litecoin, Stellar, etc. 
  • Stocks – Some of the most popular Stock Exchanges in the world are New York Stock Exchange, London Stock Exchange, Shanghai Stock Exchange, NSE, etc. 

Popular Examples –

Cryptocurrency –

  1. Bitcoin
  2. Ethereum 
  3. Tether
  4. USD Coin
  5. Dogecoin
  6. Binance Coin
  7. XRP
  8. Cardano
  9. Polka Dot
  10. Litecoin, etc. 

Stock Exchanges –

  1. New York Stock Exchange
  2. London Stock Exchange
  3. Shanghai Stock Exchange
  4. Nasdaq
  5. The Stock Exchange of Hong Kong
  6. Japan Exchange Group
  7. National Stock Exchange of India
  8. Euronext
  9. Frankfurt Stock Exchange
  10. SIX Swiss Exchange

Advantage

  • Cryptocurrency – The major advantages of Cryptocurrencies include fast transactions, no involvement of middlemen, the ability to stay anonymous, etc. 
  • Stocks – The significant advantages of Stocks include easy liquidity, less risk, having a say in a company’s decisions, etc. 

Disadvantage

  • Cryptocurrency – The significant disadvantages of Cryptocurrencies include more risk (due to no governing party), cyber attacks, unlawful use, etc. 
  • Stocks – Stocks’ significant disadvantages include fluctuating stock prices, brokerage fees, risky investments, etc. 

Conclusion

Cryptocurrencies and Stocks are the most important financial terms used in the modern world. Cryptocurrencies are virtual, digital, or online currencies secured through cryptography and made through blockchain technology.

Stocks, on the other hand, are investments that denote one’s share in a company. The significant difference between Cryptocurrencies and Stocks is that the former is a currency while the latter is an investment. 


Frequently Asked Questions (FAQs)

Q1. What Are the Advantages of Crypto?

The advantages of Cryptocurrencies are:

– Cryptocurrency transactions are speedy compared to our traditional currencies’ transactions.
– Cryptocurrencies make it possible for one to stay Anonymous in the digital Crypto world. 
– There are no middlemen involved in Crypto Transactions. 
– All Crypto transactions are recorded with the help of Blockchain Technology.
– Crypto comes with a “Virtual or Digital Wallet” that helps keep currencies. 

Q2. What is the difference between Common Stocks and Preferred Stock?

Common Stocks refer to the stocks put for purchase only for the common people. Preferred Stock is the Stock that only a small number of people have.

Therefore, the rate of dividend might be Lil higher in the case of preferred stock than the Common Stock.

Another significant difference between the two is that if a company becomes bankrupt or is bearing a loss, preferred stockholders will be paid no matter what. 

Q3. What is the major difference between Cryptocurrency and Stocks?

The major differences between Cryptocurrency and Stocks are –

1. Cryptocurrency is a kind of currency, whereas Stocks are an investment. 
2. One can choose to stay anonymous in case of a Cryptocurrency transaction, but it is impossible to remain anonymous in a Stock transaction. 
3. The Crypto market is available 24/7, but the stock market runs on fixed timings. 
4. Cryptocurrencies require no middlemen, but stock transactions require middlemen such as Brokers or Banks. 


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