5 Major Differences Between Crypto and Stock Markets

Many investors who want to enter the cryptocurrency market have traded in the stock market at least once. This is undoubtedly a great experience, but the cryptocurrency market has a number of its specifications in the investment business. Changelly is here for you to explain the main differences and similarities between stocks and cryptocurrencies.

#1. Trading Time

The stock market is open during certain hours, usually during the day. The exchanges are closed at night and on weekends. Investors have plenty of time to see the pros and cons of their investment portfolio.

trading time table

Cryptocurrency exchanges work around the clock, seven days a week, and on holidays, even when Christmas time. To trade cryptocurrencies, you need to have nerves of steel; otherwise, you will lose sleep and peace of mind.

Changelly PRO: Trading Tips

#2. Financial Statements

Public companies are required to publish quarterly and annual reports. It shows how the company has developed over a certain period and how it will develop in the future, according to management estimates. These reports usually play a critical role in the fall or rise of the asset. 

Cryptocurrency projects are not required to provide such financial information, publish forecasts, or amend them. The lack of regulation and the obligation to provide financial statements poses a severe risk when investing in cryptocurrencies. It also complicates the analysis of an asset when buying it. 

#3. Dividend

Another difference between stocks and cryptocurrencies is that stocks provide an opportunity to receive dividends. Successful companies pay dividends to shareholders annually. Their value is a few percent of the value of the shares. The board of directors discusses the sum of dividends at the general meeting of shareholders.

In the cryptocurrency world, the concept of dividends does not exist, except for a couple of cases, such as KuCoin platform tokens. Sometimes cryptocurrency splits into two or more varieties. This process is called a fork and, in some aspects, resembles a dividend.

Hard Fork and Soft Fork Explained

#4. Trading Fees

Stocks and cryptocurrencies differ in trading fees. In the crypto world, the main costs are associated with an increase or decrease in liquidity and the withdrawal of funds from an account. In the stock market, the main expenses on the investor’s results come from the broker’s commissions.

Liquidity decrease/increase for fees/rewards are typical in financial markets. The investor pays an additional interest when his order is immediately matched with an order in the order book. Thus, it reduces market liquidity. The investor receives a reward if his order increases market liquidity (it is entered in the order book, and not executed immediately).

There are no fees/rewards for decreasing/increasing liquidity in the stock market. However, both parties of the transaction pay a brokerage commission. Its size depends on the specific broker and the type of investment account. Currently, the typical levy for liquidity decline is 0.2-0.25%. Brokerage fees vary from country to country, but on average, they are relatively low.

Some cryptocurrency exchanges offer commission-free trading (Crypto.com, Kucoin, Digitex, etc.), and some even reward investors (usually a fee for increasing liquidity). In other words, you get paid for what you trade. There is simply no such thing in the stock world.

Centralized vs. Decentralized Cryptocurrency Exchanges

Another difference between stocks and digital currencies is that many cryptocurrency exchanges charge withdrawal fees. It does not happen in the world of stocks. However, brokers can charge a similar fee.

#5. Share in the Project

The big difference between stocks and cryptocurrencies is that cryptos do not give the right to a stake in a startup. If the investor owns 1% of the shares, then he also owns 1% of the company. If the project becomes bankrupt, the investor has the right to receive 1% of the remaining assets after the payment of priority debts. He/she also has the right to vote at general meetings of shareholders.

A cryptocurrency investor does not have any rights to the company’s assets that issued it and does not participate in voting. Some argue that ownership and voting rights do not matter, since investors are primarily interested in return on investment, and not in participation in the management of the company or a share in its assets.

Stocks vs. Cryptocurrencies – Summary

Stocks and cryptocurrencies differ a lot. The first type of assets is more suitable for those who like more measured trading with lower risks and better predictability. Cryptocurrencies, on the other hand, are characterized by high risks due to high volatility, as well as higher market activity, although they can generate more income.

If you are interested in cryptocurrency trading or just a purchase, check out our cross-rates for the most popular digital money.


About Changelly