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this post was submitted on 02 Aug 2024
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This is where it starts to get complicated.
You can promise to sell you stock by a certain date in the future to someone, at a price the two of you agree upon now.
If the actual price of the stock goes below the previously agreed price, by that deadline, well then you probably gained money.
If the actual price of the stock goes above the previously agreed price by the previously agreed date, you probably lost money.
This gets even more complicated when you take out a loan to buy a stock, and then do the above.
Theres a whole lot more. Check out investopedia.
Its the same in that both crypto and stocks can crater to zero if there are no buyers.
It is different in that crypto, as you say, is completely digital and nontangible, whereas most businesses on a stock exchange have at least a basis for their stock valuation in real world assets, products, services, revenue flows, profit margins and such.
Basically, what is more likely to go completely tits up?
A random NFT scheme?
A brand new start up IPO?
A long established industry giant?
Probably the 1st then 2nd then 3rd.
Ultimately they are both markets, which have prices ultimately determined by what people feel is a fair price.
Both involve projecting possible rise or fall in the value of the asset (stock vs crypto coin), but in the case of crypto, there is usually 0 actual underlying fundamentals, there is no business model beyond 'if we all invest in this it will be worth more money', which works until the price goes high enough that usually the person or group that invented the crypto sells all of their crypto. This causes panic and everyone else sells off for much less.
Functionally, that means a whole bunch of people lost money, and the originators made a whole bunch of money.
A pump and dump scheme, its usually extremely illegal.
Crypto bros kept acting like the laws governing finance did not apply to them.
Turns out, the laws do apply to them, and even as bullshit as the stock market is for the average joe, basically the entire crypto sphere collapsed in 6 months after it turned out that they were basically all cooking their accounting books and doing all kinds of fraud.
While the stock market is largely bullshit in many ways, it is at least regulated to prevent many different kinds of financial fraud, while the crypto sphere is almost entirely comprised of con artists and their suckers.