Bitcoin and Stock Market: What are the pitfalls?

Today Bitcoin is as much a part of our popular culture as the latest MCU movie. We are all aware of this new digital asset. Whether from the rags-to-riches stories of a Bitcoin investor or the newest comment on Bitcoin’s impact on nature by Elon Musk, cryptocurrencies have garnered tremendous word-of-mouth popularity.

Bitcoin’s popularity has generated a massive influx of capital in the form of significant investments from corporations like Tesla or PayPal. With the proliferation of cryptocurrency exchange platforms like, it has become easier for new investors to invest in Bitcoins as well as other Altcoins easily. Today there are around 7500 cryptocurrencies.

When it comes to assets and investments, we are also reminded of the age-old trading tradition represented by the stock market. New traders might be perplexed with several questions. Are the crypto market and the stock market similar? What is the primary difference between the assets in the stock market and the crypto market? Which of these two markets have more prospects? Without further ado, let us address some of the salient points of comparison between the stock market and the crypto market.

Trading in crypto and stock market

The stock market has always been a reliable arena for traders across the world. Is the crypto market likely to overtake the stocks with their new digital assets? There are multiple currencies like Ethereum, Ripple, and Litecoin, which are high in demand. Let us look at how these two markets work.

Points of comparison between the two markets- stock vs. crypto.


A company cannot register in the stock market without going through a strict verification procedure. Usually, a government institution verifies and audits the company to sanction it as a legitimate enterprise.

The crypto market is deregulated. Cryptocurrencies do not require any third-party regulation as they are secured through the blockchain and the smart contract.

Due to this decentralized ledger system, the working of cryptocurrencies is independent of any regulatory function by an external authorizing body.


Why do companies register in the stock market? So they can raise targeted funds that are required to run the enterprise. The primary purpose is to increase the networking capital needed to run its ventures.

Cryptos have no such obligation. They are recognized as asset class commodities simply because their rising demand increases their value. Their rising demand is due to their potential to improve on the traditional ledger system.

Crypto market and the possible pitfalls

  • Cybertheft: Digital currencies are susceptible to Cybertheft. In 2109 hackers stole Bitcoin worth 40 million USD from one of the renowned crypto exchanges, Binance. Retrieval of hacked Bitcoins is very difficult. Hackers can also override the security of wallets through fake OTPs.
  • Lack of regulation: Although cryptocurrencies work independently of governmental frameworks. While cryptocurrencies are accepted in countries like the USA or Canada, it is also banned in countries like China, Turkey, and Egypt. The ban is due to the lack of regulations that encourage activities like drug trafficking, money laundering.
  • No widespread usage: although cryptocurrencies and blockchain have revolutionized transactional networks, their usage is relatively low. It may have the potential to replace fiat currency, but it has minimal acceptability and use. This may lower the demand and consequently cause financial loss for the investor.
  • Fake cryptocurrencies: As any authorizing body does not audit them, illegitimate cryptocurrencies are circulated to scam investors. The cryptocurrency, based on the popular TV show Squid Game, turned out to be fake and cost millions of dollars of investors’ money.

Conclusion: The crypto market is speculative like the stock market. However, due to the lack of tangible assets, the volatility is much higher for cryptocurrencies. If you are planning to invest in cryptos, conduct preliminary research on the token you want to invest in.

Maria Colombo
Maria Colombo
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