Spooky season is here, and we all know there’s nothing scarier than traditional stock markets and currencies. The more time passes, the more people are realizing the value in crypto markets compared to traditional ones – after all, they are generally considered to be safer by most parameters.
Let’s discuss some of them:
- Stock Prices are reactionary- whatever happens in the world is reflected in stock market prices, be it good or bad. Whenever a major occurrence takes place in the corporate or political landscape, markets can suffer greatly (depending on the occurrence). An example is Trump’s trade war with China and other countries. Tariffs on U.S. goods are rising as retaliation from said countries, which is harming companies that do business internationally. Seeing as stock prices reflect present and future earnings, they can and have been heavily influenced by this event. Because most of the profit is made by predicting future profits, the reactionary nature of traditional stock markets combined with the unpredictability of the real world make for an unstable and unsafe bet for your investments. Crypto markets, however, are less reactionary to these types of world events. They can be made volatile by events in the crypto world, but not to the same extent as traditional stock markets.
- Federal reserve controls interest rates- Federal Reserves control interest rates, because they control countries’ currencies. In the US, these rates have been low for the last decade; however, the Federal Reserve is raising them (with further increase predicted soon after). These decisions to raise or lower rates can depend on the stock markets as they’re a generally good indicator of what’s happening to a country’s economy. As if the thought of a private entity like the Federal Reserve controlling currencies, inflation, and interest rates wasn’t scary enough, a highly reactionary stock market being a major factor in how the Reserve makes decisions that can affect populations truly send chills down our spines. With crypto, this isn’t an issue. Since blockchain is decentralized in nature, there isn’t one entity holding that much power over it. This makes it safer on all fronts, which means you don’t have to depend on an organization’s decisions based on something you have no control over. This brings us to our next point:
- Stock markets are unpredictably susceptible to inflation- inflation is indirectly caused by governments, and stock markets definitely react to said inflation. However, when it comes to cryptocurrencies, they come with inflation already built into them, it’s automatic and definitely less sporadic than traditional inflation, thus stabilizing the phenomenon and rendering its markets far less susceptible to it.
- Stock markets are susceptible to political uncertainty- we’ve touched on this earlier, but this is a point deserving to be made in its own right. The stock market despises volatile scenarios, yet every day is one. With wild headlines ruling the media and the press, one can’t help but wonder if anything about traditional markets is certain at all. Will the trade war continue? How will it affect the markets and my investments? Will jobs be lost because of it, will corporations shut down over it? Those are questions anyone with a stake in traditional markets is asking themselves. While political uncertainty can at times influence crypto markets, it’s not to the same catastrophic extent as with traditional ones. Effects are brief and prices generally tend to recover.
- Traditional markets are run by many individuals, who controlled by other individuals, who are controlled by a small number of individuals- as with most things in the world, the world of traditional finance is comprised of many hierarchies. No matter how many levels these hierarchies are made up of, there are always ultimately people in charge. At the end of the day, the Federal Reserve is run by people, and those within it that have the power to strategies and make final decisions aren’t many. This leaves far too much room for human error, bias, and duplicitousness. With crypto markets, this isn’t a problem. As we have already established, the most appealing aspect of crypto is that it’s decentralized. An unfathomable number of computers run things, leaving absolutely no room for human error, bias, and duplicitousness.
There is no evading it, traditional stock markets are scary places. Having learned all of this, we feel safe in the hands of crypto, as a decentralized, fair, secure, and non-human reliant system seems like the obvious way to go.