Dogecoin is not a stock; it’s a currency that uses blockchain technology. It’s similar to the US dollar in digital form. Dogecoin trading is similar to Forex trading.
Stocks are traded on the stock market, such as NASDAQ or NYSE, whereas Dogecoin is traded on the crypto exchanges such as Bittrex, Kraken, Binance, etc. As Dogecoin is not a stock, and crypto exchanges are not regulated, please do your due diligence before you trade Dogecoin.
Moreover, stocks are issued against a company. Each share gives us fractional ownership of the company. If we believe that a company has growth potential, we buy and hold the stocks. Whereas, if we find that a company may go bankrupt, we take a short position. Our entire stock investment depends on the company’s future growth.
On the other hand, Dogecoin is not backed by Gold, Silver; not even the US dollar. Dogecoin does not give us any ownership of anything. It’s a currency, not equity. Dogecoin has value because people believe it has value. If we buy and hold Dogecoin, we can profit off of it if more people purchase Doge, and its price goes up.
We open a brokerage account to trade stocks. Every brokerage account is FDIC and SIPC insured. Thus, if a brokerage company goes bankrupt or gets hacked, FDIC and SIPC will cover our investment. In contrast, we have not seen any crypto exchange that ensures users’ crypto investment.
For example, we can buy Dogecoin using Robinhood. However, there are two separate companies under Robinhood:
- Robinhood Financial, LLC.
- Robinhood Crypto, LLC.
Robinhood trades all its stocks and options through Robinhood Financial LLC. This company is a member of FINRA/SIPC, and all of your investment is insured, up to $500,000. Therefore, if Robinhood for any reason goes bankrupt, you would get back up to $500,000 from that insurance.
However, when you trade Dogecoin on Robinhood, these trades are executed under Robinhood Crypto, LLC. Robinhood keeps all of your cryptos in this company. Robinhood Crypto is not a FINRA/SIPC member, and your crypto investment is not insured. Therefore, if Robinhood suffers major hack or major server failures and fails to restore its servers properly, you may lose all of your Crypto investment.
Every trading platform that allows you to buy and sell cryptos has these two company structures similar to Robinhood.
Webull and Robinhood work similarly. However, the only difference is that Robinhood is an American company, and Webull is a Chinese company.
Crypto exchanges are unregulated. Please share your sensitive information carefully.
Binance Crypto Exchange is a Chinese company. We don’t use it because we don’t feel comfortable sharing our social security number, driver’s license, and house address with a company with CCP connections.
Moreover, please don’t store your cryptos on exchange. Transfer those to your offline or cold wallet for security. If an exchange gets hacked, you will lose all of your investment.