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The Cryptocurrency Market Compared to the Stock Trading System

The cryptocurrency space is still young and being developed and many people have questions. My goal is to hopefully give you a little more knowledge of how the cryptocurrency market works.

To accomplish this, I will compare it to the traditional stock trading system.

When using a traditional stock trading system, you take funds from your brokerage account, then your broker connects you to the exchanges like the NYSE where you can buy stocks, bonds, etc. When you sell, the process reverses. Money from the stock you sold goes back to your brokerage account and then to your bank account if you choose.

Here’s an example of what it looks like:

When You Buy – Bank, Brokerage, Stock Exchange

When You Sell – Stock Exchange, Brokerage, Bank

With traditional trading, you can use one service to complete the cycle.

Keep in mind that the cryptocurrency ecosystem is still new, especially compared to the traditional stock trading system. You may need to use two or more services. With the cryptocurrency system, it all starts with converting your local currency to cryptocurrency, then use cryptocurrency wallets to store your cryptocurrencies. Also, use cryptocurrency exchanges to buy and sell cryptocurrencies.

What is a cryptowallet? A cryptowallet is a digital wallet to store, send, and receive digital currency like bitcoin.

What is a cryptocurrency exchange? An online platform where you can buy sell, or exchange cryptocurrencies for other digital currencies.

Please note: you cannot buy cryptocurrencies on a traditional stock exchange.  If you go to your brokerage account and try to buy BTC (the symbol for bitcoin), you’ll end up with Bangpakong Terminal PCL, not bitcoin. Also, if you’re interested in Bitcoin, you most likely will not hear it from your broker because there is no incentive for them to sell it to you since they won’t receive a commission. Whatever you decide, be sure to do your research on cryptocurrencies and learn about the different services in the ecosystem before you use them.  

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About Touya Kelley

Touya Kelley has spent the last 5 years of her life offering financial solutions to people. On her personal finance blog Break Free And Win, her goal is to help and encourage others to manage God's money well.

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