In 2021, almost everyone has heard about Bitcoin unless (they are living under a rock). To date, Bitcoin is the most primitive and highest priced cryptocurrency. The trillion-dollar cryptocurrency market may have faced ups and downs but has proved one fact– that it is here to stay. With millions of users trading in hundreds of crypto tokens every day, this market has almost paralleled the stock market.
Difference between the crypto market and stock market:
- Stability
The share market is way more stable than the cryptocurrency market. You can rarely lose your entire investment in stocks within hours. This condition also implies that the stock exchange does not provide an exponential return on investment within a short timeframe. For further details, you can also consider click here!
- Centralization vs Decentralisation
The main contrasting difference between cryptocurrency and the stock exchange lies in the existence of a central authority. Satoshi Nakamoto created cryptocurrency with one goal, i.e. decentralization of funds. The American financial markets are regulated by government bodies such as the Securities and Exchange Commission (SEC) or Commodity Futures Trading Commission (CFTC), while the Indian stock market by the Securities and Exchange Board of India (SEBI). On the other hand, the global cryptocurrency market has no centralized regulatory body. Based on a platform of blockchain technology, complex programs run the system. The first block of Bitcoin came with a hidden message that criticized the flaws of a centralized banking system. It was the headline of The London Times of 3rd January 2009.
Bitcoin as a stock:
Just to provide context, if Bitcoin listed itself on the New York Stock Exchange (NYSE), it would have occupied the seventh position in terms of the largest market capitalization.
Bitcoin is not listed in the stock market to date. However, cryptocurrency trading exchanges like Coinbase Global have registered themselves for IPO listing in 2021. We can deduce that if the demand for the company’s shares increases, it will reflect positively on the prices of Bitcoin.
Some of the Wallstreet giants who are interested in Crypto trading are:
Goldman Sachs:
Goldman Sachs has shown continued interest in Bitcoin and some altcoins, one of the most successful Wall Street players. In May 2018, they planned to open a bitcoin trading desk, although later they cancelled this project due to the fall in Bitcoin’s prices.
Fidelity Investments
Another Wallstreet hound, Fidelity, reportedly had exchanges with SEC regarding the Bitcoin index PR and some preliminary ETF prospectus discussions.
Pros of listing on the Stock Exchange:
- Reduced risks: It is evident that if Bitcoin gets incorporated into the share or stock market, the volume of transactions will increase rapidly. As a result, the fluctuations of the cryptocurrency market will reduce.
- Trust factor: A lot of people are afraid to invest even a meagre amount in cryptocurrency. With a stamp from authorized bodies like the SEC, they will step forward.
- Complexity: IPO listing of Bitcoin will reduce the complexity of handling them.
Cons of listing on the Stock Exchange:
Having said that, Bitcoin investors and enthusiasts are not happy with this idea as this violates the fundamental principle of a cryptocurrency– decentralization.
- Loss of Ideology: Listing any token on the stock exchange will transfer power control to centralized bodies like the SEC. In this case, Bitcoin loses its identity.
Conflict of Interest: If the significant crypto hodlers are not on the same page with this idea, chances are they might cash out due to ideological differences. Bitcoin’s price will fall rapidly with more tokens available in the market, and Bitcoin may be out of the financial scene within months.
Conclusion
This topic of discussion seems like a never-ending debate, and at one point, this topic may seem like a paradox. You can weigh the pros and cons of Bitcoin entering the stock exchange, but you cannot predict the future about what happens ultimately. Either way, Bitcoin and its fellow cryptocurrencies will continue to amaze us and continue being the dark horse of the financial world.