What Is a Secondary Market?
A secondary market is a place where investors or traders can buy and sell different kinds of assets or securities that they own with others.
In the traditional finance sector, this is usually a place where retail investors trade financial instruments like stocks, bonds, options, and futures.
Enabling Access to Financial Instruments
But the role of the secondary market is to provide access to the average investor’s financial instruments, which they would otherwise not be able to obtain from the primary market because a primary market in traditional financial environments is usually reserved for “qualified” investors and large institutions.
A secondary market can be compared to a retail store like Walmart, where anyone can shop; meanwhile, the primary market is for suppliers, where wholesalers buy in large quantities.
Primary and Secondary Dynamics
With cryptocurrencies, the same principle applies.
The only difference is that the primary market equivalent is currently largely based on token sale platforms.
The restriction here is not the number of tokens but rather the buyer’s qualifications and appetite for risk.