What are the commonalities and differences between the stock market and crypto-assets?
If you are a cryptocurrency enthusiast and know the basics of how the stock market works, you may have noticed that there are many similarities between these two worlds.
In both cases, it is possible to buy and resell movable property, make a profit, and invest in various projects. It will be necessary each time carefully to read the specialized press and to inform as much as possible of the evolution of the things.
But there are also fundamental differences between these two areas.
For example, the stock market has been established for several centuries, and its functioning is institutionalized, surrounded by well-defined laws and organizations. A very large part of the economy works thanks to it. Cryptocurrencies (electrum wallet bitcoin Private fork), they are still very recent. The Bitcoin has emerged in October 2008 and the development of the sector is still in its infancy. The governments of the world have not all looked into it, and so it is still a world where pyramid schemes and other insider trading are common, since they are not punishable by the laws in the state of things.
Some predict that the universe of crypto-assets represents the future of the stock market as we know it today. Others are more cautious and talk about a parallel market. But all agree that the share of cryptocurrencies (electrum wallet bitcoin Private fork) in the real economy will increase to the detriment of that of the stock market. Through this article, we will make a comparison between cryptographic currencies and the stock market. We will discuss the common points, but also the fundamental differences between these two modes of financing.
The IPO and ICO system
When a company decides to go public, it does what is called an Initial Public Offering (IPO), or in French: an IPO . It is a fundraiser that allows the company to finance its projects by offering in exchange for shares. IPOs are generally accessible only to small groups of people and are highly regulated . It is very difficult, if not impossible for an individual to take part in such a fundraiser.
In the world of cryptocurrencies, we speak rather of an Initial Coin Offering (ICO) , which could be translated by introduction on the market . This also allows to finance the project (s) related to this cryptocurrency and in return gives buyers what are called tokens (or tokens). ICOs are accessible to all, with the exception of a few countries such as the United States or China that prohibit their citizens from participating (with fairly moderate success). We usually buy tokens by paying with other crypto-active like Ethereum or Neo. This way of organizing a fundraising is very little or not regulated at all . Many fraudulent ICOs have already taken place, with the sole objective of stealing money that naïve people had decided to invest in the project.
Tokens and actions
In the world of cryptocurrencies, there are several different types of tokens (or tokens) . On the one hand we find the utility tokens, which offer users access to a specific service. On the other hand, we find what we call security tokens and equity tokens:
The equity tokens, which could be translated by title token, is actually a part of the society in question, transposed on the blockchain. The token is, to put it another way, a cryptographic representation of a financial security relative to the company that issued it. It therefore confers the right to vote at general meetings of the said company, like a share of a company acquired through the stock exchange.
For security tokens, it’s a bit more complicated. This is a category apart, appeared with crypto-currencies. These are tokens that give the illusion of some power, but which, in reality, do not confer any right to their holders on the decisions of the person (company or not) who manages the crypto-asset in question. These are simply tokens whose value is derived from the success of the crypto-asset concerned. They are therefore in no way comparable to securities tokens, since they have been amputated from the associated voting rights. In the end, if a French translation should be made, we could speak of investor’s token , a general term implying no concrete right.