Crypto-exchanges are platforms used to exchange and trade cryptocurrencies for other cryptocurrencies or for fiat currencies. Stock exchanges are platforms to buy and sell assets or stock of value for money. The definitions of both exchanges are self-explanatory, but, the two have several functional similarities and even more differences.
5 major differences between crypto- and stock- exchanges are as follows:
Margins of Profit and Loss
There is a huge gap between the margins of profit and loss on crypto-exchanges and stock exchanges. Stock market investors need to be patient as they usually invest a significant amount of money and the process is slow. Some stock purchases take years to start bringing in profit.
In the cryptocurrency market, the volatile nature of the digital assets results in high profits in a short amount of time. Of course, there are possibilities of huge losses as well. However, the overall cycle of profit and loss is much faster.
Cryptocurrencies are globally accepted since the transfer of assets is easy and have minimal transaction fees. In traditional investments, formal accreditations, qualified institutional buyers, and high trading fees are major elements. Stocks are traded mostly in the country where they are incorporated.
The stock platform is only open for a limited time whereas crypto-exchanges operate 24X7.
Supply and Demand
Cryptocurrencies have a cap; Bitcoin assets have a cap of 21 million and when this figure is attained, there will be no more mining. The same applies to altcoins, but they have different cap values. The limited supply will ensure high demand for the assets. In stock exchanges, there are no such limits. Demand will always trigger supply; a company can issue more stocks on demand.
Risks of the Trade
Cryptocurrencies are a volatile market. The risk is the major reason for concern among many investors of crypto. Demand and supply create huge peaks and dips in the market. However, since stock markets are also completely dependent on demand and supply, both markets have definite risks. Stocks have the added stability from being backed by the government whereas cryptocurrencies have no central entities.
Manipulation of Market Trends
Stock markets cannot be influenced significantly by any players; crypto-markets are subject to manipulation by ‘Whales’. Major-movers with a huge supply of digital assets are called Whales and these players can actually change the value of a particular asset overnight. Since stock markets are regulated, there are lower chances of market manipulation.
PCEX is a new crypto-exchange with high liquidity and a secure platform. Through a broker channel, crypto-traders on the platform will have round-the-clock assistance on the crypto-exchange. With a superior matching engine and fast order-matching, PCEX will be a game changer in the world of crypto-trading.