Quick take
- A share is legal ownership of part of a company, with rights to profits and votes.
- Shares trade on regulated exchanges during set hours, usually through a licensed broker that holds them for you.
- Share prices are linked to company earnings, which gives investors something to value that most tokens lack.
A share is not a token
Many crypto tokens promise a community, a use inside an app or a vote on a protocol. A share is something more concrete: legal part-ownership of a company. If the company earns money, shareholders are entitled to a slice of it, sometimes paid out as dividends. If it is sold, shareholders are paid. That link between price and real profits is what analysts try to value.
Where shares trade
Shares are listed on regulated exchanges such as the New York Stock Exchange, Nasdaq, the London Stock Exchange or the Hong Kong exchange. Each has fixed trading hours; the main New York session runs from 9:30 to 16:00 local time on weekdays. Outside those hours prices mostly stand still, then open at a new level if news has broken.
Brokers and custody
You do not buy shares directly from an exchange. You use a licensed broker, which buys them for you and usually holds them in a nominee account, legally separate from the broker's own money. If a regulated broker fails, client assets are protected by these rules, and in many countries a compensation scheme covers shortfalls up to a limit. That is a very different position from coins held on an unregulated crypto exchange.
How you make or lose money
- Price changes: if the market values the company more highly, the share price rises.
- Dividends: some companies pay regular cash to shareholders. They can be cut at any time.
- Losses: a share can fall to zero if a company collapses. Shareholders are paid last.
Indices: the stock market's "total market cap"
Crypto users watch total market capitalisation to judge the whole market. Stock investors watch indices such as the S&P 500, which tracks around 500 large US companies, or the FTSE 100 in the UK. Index funds let you buy a whole index in one go, which is how many people invest for the long term.
Volatility, in context
Large company shares are generally less volatile than major cryptocurrencies, but they still fall hard at times. The S&P 500 lost roughly a third of its value in a few weeks in early 2020 before recovering. Anyone investing needs to be ready for drops like that.
Costs to watch
Commissions, spreads, currency conversion when buying foreign shares, and yearly fund charges. See trading fees explained.
Getting started sensibly
- Choose a broker authorised in your country: here is how to check.
- Decide whether you are investing for years or trading for weeks; they need different approaches.
- Start small, and spread your money across many companies rather than one.
Common questions
Can I buy stocks with crypto?
Regulated stock brokers accept money, not crypto. Some crypto platforms offer tokens or contracts that track share prices, but these are not the same as owning the shares and may carry extra risks.
Why do stocks close at night when crypto doesn't?
Stock exchanges are regulated venues with set trading hours, partly so information is released and absorbed in an orderly way. Crypto markets have no central exchange and no closing time.
Sources
- U.S. Securities and Exchange Commission, Investor.gov introduction to stocks