Recently, a trading investment called crypto emerged which became very popular. Then, what is the difference between stocks and crypto? To be clearer, see the full review below.
What Are Stocks and Crypto?
Shares are investment instruments in the form of a sign of ownership of a company. A person can make a transaction of buying and selling shares from the stock exchange, for example the IDX (Indonesian Stock Exchange). For those of you who are interested in investing or trading stocks, you can create an RDN (Customer Fund Account) from a securities company that is currently quite widely available in Indonesia. You can make stock transactions following trading hours via the platform provided by the broker.
Meanwhile, for those who haven’t heard the term crypto for a long time, you must first understand what the difference between stocks and crypto is before starting to invest there. Crypto or also often called cryptocurrency is an investment in the form of digital currency with transaction processes via the internet.
Crypto assets can be Ethereum, bitcoin or Litecoin. Currently, crypto is under the supervision of CoFTRA (Commodity Futures Trading Regulatory Agency)
Until now, stocks are still a popular trading and investment instrument. But since the presence of crypto which is gaining popularity, Bitcoin and Altcoins are now also starting to be in great demand. Moreover, the price of crypto has experienced a tremendous spike in 2020 so that many people are interested in investing in crypto.
What Is The Difference Between Trading Crypto And Stocks? Here Is The Explanation
If you’ve previously traded stocks and want to try crypto, there are a few things you should understand before trading in the stock and crypto markets. The reason is, the character of stocks is different from crypto. Here are the differences.
1. Instrumen
The most basic difference between stocks and crypto is the instrument used. The instrument used in the stock exchange is company shares. Meanwhile, the instruments traded on crypto exchanges are digital currencies such as bitcoin.
When you buy shares of a company via the stock exchange, the shares purchased essentially represent the percentage ownership of the company. The company’s performance can determine the value of the shares you own.
Companies that are open or have gone public can launch shares at any time to raise the capital needed to expand their business.
But if you buy a crypto asset, whether it’s a token or a coin, the asset you own doesn’t necessarily represent partial ownership of the project or the company that issued it.
Tokens and crypto coins themselves also have different functions. Coins are blockchain native assets that can be used as payments. Meanwhile, tokens come in various classifications, one of which is a utility token that functions to provide access to certain protocol services and a governance token to signify support for proposed changes to a protocol.
In some crypto assets, tokens or coins have a limited number. This aims to ensure that its value continues to increase as the asset continues to increase.
2. Trading Time
The next factor on the difference between stocks and crypto is trading time. For those who are used to trading stocks on the IDX, trading time is only on weekdays, namely from Monday to Friday.
In addition, the time is also divided into 2 sessions, namely at 09.00 WIB to 11.30 WIB and session 2 at 13.30 – 14.50 WIB. This means that traders already know that the busiest times for transactions are only those hours.
This is very different from the crypto and stock markets which are open 24 hours 7 days so they never have a day off. With the difference between stock and crypto trading in terms of time, the strategy between stock and crypto trading is also different. For example, crypto trading must see when trading is busy.
Because the price will move more when there is an increase in transactions. Busy trading usually occurs during the day of activity in Europe and the US, which is early in the morning until the morning time in Indonesia.
3. Transaction Unit
To make stock transactions in Indonesia, traders are required to make a minimum transaction of 100 slow or 1 lot. This means that if the shares are priced at Rp. 1 thousand per share, the minimum issued capital is Rp. 100 thousand per lot.
This is different from crypto. Moreover, the current Bitcoin price has reached hundreds of millions of rupiah. In addition, Ethereum also costs tens of millions of rupiah.
However, small capital traders do not need to be discouraged because they can still trade by buying the smallest available fraction. For now bitcoin can buy up to 8 decimal fractions.
4. Choice of Trading Platforms
Stock and crypto trading platforms have different characteristics. For stock trading, traders can transact by becoming a securities customer.
For crypto trading, traders can make transactions through stock and crypto applications such as Pintu, Binance, Indodax, Tokocrypto, and so on. Furthermore, for crypto storage, traders can also store it in crypto wallet applications such as Metamask
5. Transaction Fee
The imposition of transaction fees for stock and crypto trading is also different. Usually stocks set a transaction fee for buying and selling activities of 0.3% per transaction. However, the amount of this fee is also different for each security.
Unlike stocks, crypto transaction fees have a quite different scheme because they adjust to the type of exchange. But the majority of exchanges will charge transaction fees for cash disbursement at different rates.
6. Volatilitas
The next difference between stocks and crypto is in terms of volatility. In Indonesia, stocks have a volatility limiting mechanism when the market is out of control, for example there is top-down auto rejection to trading halts or temporary trading stops. So volatility will be more maintained when there is a drastic increase or decrease.
Unlike stocks, in crypto there is no volatility control, so crypto prices can move based on existing supply and demand. That’s why crypto prices can soar high or fall significantly.
7. Connection
In terms of connection, stock transactions can be limited to exchanges in one country. For example, foreign traders who want to buy shares on the IDX must follow the rules in Indonesia, for example having a securities account in the country. Unlike crypto, the connection is between countries and is unlimited, so the number of traders who make transactions is also more.
8. Fundamentals
Crypto also has fundamentals that can be known from a whitepaper or stock prospectus. The whitepaper contains a crypto project development roadmap from its development map, so that crypto investors and traders can know how good the prospects are.
Crypto fundamentals differ from stocks in terms of their financial performance. When there is a lot of debt or a loss occurs, the fundamentals are not good.
9. Regulator
Indonesia has legalized cryptocurrency as a commodity so that it is under the auspices of CoFTRA. Meanwhile, the shares are under the auspices of the OJK.
Thus the explanation of the difference between stocks and crypto. By knowing the difference, you will certainly be more confident to make sure to choose which instrument is the most suitable for investment or trading.