Popular science: the difference between cryptocurrencies such as Bitcoin and stocks

For the basic science popularization of BTC, you can watch my last video. In this article, we mainly talk about the difference between cryptocurrency and stocks.

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The major differences between Bitcoin BTC and stocks are as follows:

1. Number of shares to buy: Stocks need to be bought by 1 share, or 1 lot, which are basically integer multiples of 1 or 10, but digital currency can be purchased in 0.1, 0.01 or even 0.0001 shares, so BTC is expensive, but It is not necessary to buy by 1 BTC, you can buy at the decimal point level like 0.1.

This feature also increases the flexibility and circulation of digital currency. It is also the point that needs to be understood the most. However, since BTC does not yet have an ETF, it seems that buying from traditional brokerages can only buy fund shares such as Grayscale Fund GBTC, In fact, it is not to buy BTC, but to buy funds, and Grayscale will operate again. There are also funds from various countries applying for such similar shares one after another.

Individuals can go to the exchange to buy, so I won’t describe it too much here, but you must not touch the pheasant exchange.

2. Stocks represent company shares, but digital currency does not necessarily have a specific project party, nor does it necessarily have an equivalent company share. But there will be many different roles and play methods

Stocks: You are a shareholder when you buy them, which means you have a share in the company. The company’s profits can be distributed to you as dividends or reflected in the rise and fall of the stock price. You dont actually own stocks, most retail investors are actually entrusted to brokers. Retail investors cannot transfer stocks to their wallets in real time.

Cryptocurrency: Buying is equivalent to owning digital currency. You can choose to store it in an exchange, or apply for a separate online wallet, store it in your own wallet, and transfer it at any time (protect your private key and mnemonic phrase) . It means that you fully own the cryptocurrency, and its value fluctuates with ups and downs, but you can choose where to store it. It can be transferred at any time, which is also a major feature of cryptocurrencies. For example, BTC, if you buy BTC and transfer it to your wallet, you can see the transfer of this address online, and the value will be transferred accordingly.

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In a nutshell:

1. Cryptocurrency Token and stocks both have profit expectations or valuation values ​​generated by future construction expectations; but profit expectations are different. For example, stocks are outputs that fully reflect the value of your company itself, for example$Pinduoduo(PDD)$The income from selling a lot of goods increases, and then the enrollment is expanded. Everyone expects that the next wave of sales will increase, which will bring about an increase in income, which will lead to an increase in the companys market value. The stock price is correlated with the value expectation of the company itself, that is, the security.

However, there is a big difference in digital currency. For example, smart contract platform construction class ETH, there is no specific company, and it is completely open source. The application on the platform may be applied to the gas generated by the smart contract to burn ETH, which also brings in disguise. The value of ETH increases. Other projects built on Ethereum will also provide expectations of price increases for a long time, but this is not the logic of securities and companies at all, but a logic similar to supply and demand and mathematics, or ecological value.

BTC is a completely decentralized project. Everyone recognizes that it can replace gold and can transfer value in real time. It is recognized by institutions (Paypal, BlackRock, Goldman Sachs and other large international institutions), and the price has stabilized at the same time. rise. The consensus of the organization is formed that it can be safely used as digital network gold to store value. At this time, it is necessary to consider the price of BTC from the perspective of fundamental market value instead of considering the price of BTC from excessive technical analysis, volume and price analysis. .

It seems that the value complexity of tokens is higher than the relative complexity of stocks. However, some tokens are too similar to securities, so they will also be targeted by the SEC. If these tokens are sued successfully, they must abide by the Securities Law, and their project parties must prove that they do not manipulate the market. Recently topped by the SEC is the Ripple XRP cryptocurrency. Because the main XRP is issued by Ripple, there are not many other applications and ecology, and the high-level executives have been selling coins, which is too similar to stocks.

2. But tokens have use and application value, but stocks do not (for example, tokens are made into game currency, tokens are made into artwork codes or tokens are made into real estate certificates).

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Async Arts First Super was sold at a price of 300ETH

NFT artwork is only a type of cryptocurrency application, which can also be applied to different application scenarios such as copyright, games, contracts, etc. Such complex application scenarios will prevent some tokens from being considered securities. Stocks do not have these other applications at all, and stocks are mainly used in value expression + voting.

I hope this popular science will help you understand the difference between stocks and digital currencies. This article does not serve as any investment advice, but only as popular science.