3 Differences Between Cryptocurrencies and Traditional Markets

The quiet launch of Bitcoin in 2009 could not have predicted the construction of an industry that is valued today at more than 250 billion dollars. The decentralization features and ease of investing in cryptocurrencies have welcomed tens of thousands of traders, miners and “crypto enthusiasts”. Find out what the differences are between traditional markets and cryptocurrencies, and why they represent a unique opportunity.

Although some more traditional investors are reluctant to trade cryptocurrencies, the industry is full of opportunities.

24/7: Cryptocurrency markets never sleep

This is probably one of the main characteristics that attracts the attention of investors in traditional markets. To give a little context, the reference to “traditional markets” is mainly linked to the stock market, currency exchange (Forex), commodities and indices.

And there is a tradition: the exchange of shares, for example, dates back to the beginning of the 17th century, when the first shares were issued to the public in the Netherlands. For its part, the Forex market as it is known today, became official in the early 70s, as reported by FXGM. The exchange of currencies, however, has been done under other modalities and markets since before the Second World War.

Thus, despite having more than 10 years in circulation, Bitcoin represents the trump card of an extremely new and modern marketplace. One of the great advantages offered by cryptocurrencies is the possibility of trading at any time of the day, including weekends and holidays. This is due to the decentralized nature of cryptocurrencies and the operating model adopted by the platforms where they are traded, known as “exchanges”.

Unlike other financial instruments, a 24/7 structure is a breakthrough for those who want to profit at any time through short-term trading and even day trading. Forex pairs do not trade on weekends, while stocks and indices are usually available for only 7 hours a day.

In addition to exchanges, most brokers also allow 24/7 cryptocurrency trading, so there is no rest for bitcoins and altcoins.

eToro
Key Features
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Min Deposit
$50
United States
Start Trading View key features
Key Features
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Top Coins
  • ETH
  • NEO
  • ADA
  • BTC
  • XLM
Payment Methods
Wire Transfer, Bank Transfer
eToro offers a wide range of cryptos, such as Bitcoin, XRP and others, alongside crypto/fiat and crypto/crypto pairs. eToro users can connect with, learn from, and copy or get copied by other users.
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.

Very low commissions and spreads

Although this strictly depends on the platform selected to operate, the commissions for the exchange and trading of cryptocurrencies are usually very low. This is especially true when trading real cryptocurrencies on exchanges, where transaction fees are usually in the order of 0.5%.

For their part, spreads —which constitute the difference between the purchase price and the sale price— are usually very small and even non-existent. This is another benefit for crypto, where the balance tilts positively towards Nakamoto’s model when we make a comparison of Bitcoin Vs. stocks.

A book of orders from the popular exchange Binance reveals that spreads are not imposed by the platform but determined by the market itself. Thus, they are usually very low. In the example for the LTC / BTC (Litecoin / Bitcoin) pair, the spread is approximately 0.06%.

It is important to note that this changes significantly when cryptocurrencies are traded at a broker, where contracts (CFDs or futures) are traditionally used for position placement. Although the cost is higher and similar to that of traditional markets such as listed funds or ETFs, it comes with benefits such as the use of advanced trading tools, like opening short positions or using leverage.

In any case, risk management and the balance of your investment expectations are always recommended elements. Some popular platforms for trading cryptocurrencies are listed below:

Binance
Key Features
Huge range of cryptocurrencies
Highly liquid
2 Factor Authentication
Min Deposit
$1
United States
Start Trading View key features
Key Features
Huge range of cryptocurrencies
Highly liquid
2 Factor Authentication
Top Coins
  • BTC
  • BCH
  • XLM
  • DOGE
  • ADA
Payment Methods
Cryptocurrencies
Binance has grown exponentially since it was founded in 2017 and is now one of, if not the biggest cryptocurrency exchanges on the market.
eToro
Key Features
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Min Deposit
$50
United States
Start Trading View key features
Key Features
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Top Coins
  • ETH
  • NEO
  • ADA
  • BTC
  • XLM
Payment Methods
Wire Transfer, Bank Transfer
eToro offers a wide range of cryptos, such as Bitcoin, XRP and others, alongside crypto/fiat and crypto/crypto pairs. eToro users can connect with, learn from, and copy or get copied by other users.
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.

Versatility and use cases: taking advantage of cryptocurrencies

When an investor “buys” an ounce of gold or a barrel of oil, it is highly likely that his investment is based on a paper or contract, where the holder guarantees to pay the difference at the closing of the contract.

There are very few occasions where the investor receives a real gold bar or a barrel of oil at home. In contrast, exchanges and even brokers like eToro (through the eToro Wallet) deliver real cryptocurrencies that the user can transfer, spend, or exchange.

Some digital currencies like Dash or Reddcoin can be stored to generate passive income for the simple fact of becoming a sort of ‘shareholder’, a process known as staking. In the case of Tezos, its liquid participation test allows anyone with XTZ coins to “bake” them by freezing their funds through a delegation scheme. In exchange, he gets an annual commission of around 6%.

Another model that can be adopted is that of mining, which is the backbone of decentralization of digital currencies. The possibilities and use cases for cryptocurrencies are virtually limitless: cross-border and private transactions, value assigned to the Internet of Things (IoT), creation of digital content, optimization of supply chains and much more.

eToro
Key Features
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Min Deposit
$50
United States
Start Trading View key features
Key Features
Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Top Coins
  • ETH
  • NEO
  • ADA
  • BTC
  • XLM
Payment Methods
Wire Transfer, Bank Transfer
eToro offers a wide range of cryptos, such as Bitcoin, XRP and others, alongside crypto/fiat and crypto/crypto pairs. eToro users can connect with, learn from, and copy or get copied by other users.
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.
FOREX.com
Trade on popular Crypto markets
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Forex trading involves significant risk of loss and is not suitable for all investors.
LonghornFX
The broker offers access to a trusted MetaTrader trading system
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CEX.IO
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Cryptocurrency staking
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