Cryptocurrencies or stocks which should you invest in?
Since Bitcoin was first listed on an exchange in 2010, investors have flocked to this new digital currency due to the investment advantage that it has to offer the world.
High returns are the reason why many investors have shifted from the centralised stock market to the decentralised crypto market.
But the question is when comparing cryptocurrencies to stocks which one is the right one for you?
In this guide on cryptocurrencies vs stocks you will learn:
- Cryptocurrencies vs Stocks evaluating the right one for you
- Younger people prefer cryptocurrencies over stocks
- Cryptocurrencies or stocks – both is better?
While the decentralised cryptocurrencies do offer a higher return on your investment, the risks involved in such investments are also very high.
This is why traditional investors do prefer to invest in the stock market. This market offers also considerable returns.
However, this is a market that currently is filled with expertise and experience from so many investors.
That means you are effectively ‘competing’ against a much greater number of investors.
But the cryptocurrency market is still very young in comparison. And sure there are people who might have more connections than you. And they might know more than you.
But overall this is a young, and still a very unexplored market. It is now clear that both cryptocurrencies and stocks have their own share of advantages and disadvantages.
Let us take a closer look at these investment options. .
Advantages of Cryptocurrencies over stocks:
Cryptocurrencies are entirely free from centralised control which is why many people prefer these digital assets over traditional stocks.
Cryptocurrencies do have many advantages over the traditional stock market. Some of these advantages include:
1- High returns
Cryptocurrencies have by far been the most rewarding investment option in recent times.
Popular cryptocurrencies such as Bitcoin and Ethereum have increased over thousands of percent in value in just a few years. None of the centralised stocks have been able to replicate this performance. So when comparing cryptocurrencies to stocks, the results of investing stocks could take a long time for you to see the results. Whereas cryptocurrencies are capable of achieving this overnight.
2- A market that never sleeps
The stock market has a fixed time within which one needs to do all the trading. So, a part of the day is actually wasted as the stock markets would not have opened up yet.
This cannot be said about the cryptocurrency market. The crypto market is one that never sleeps. You will be able to find amazing trading opportunities throughout the day as well as during the night.
Thus, helping you capitalize on its benefit to the fullest.
3- Free from the centralised influences
All trades on the traditional stock market are closely monitored. Thus, invading your privacy.
On the crypto market, you can trade between different cryptocurrencies anonymously and therefore, provides you complete privacy while trading.
4- Opening an account:
To begin trading in any market, you will need to open a trading account on an exchange. Opening an account on a stock exchange is not exactly straight forward.
Not only does it take a long time for you to open an account, but it also requires you to follow a lot of procedures.
This is not the case in the crypto world. You will be able to register on all the exchanges by simply using your email ID and phone number.
This easy registration process is another factor that attracts investors towards this market. You can also register for any exchange in the world. As exchanges more operate on a global level than on a national.
Advantages of Stocks over cryptocurrencies:
1- More stable than cryptocurrencies: Both cryptocurrencies and stocks are not very durable. However, between the two, stocks are more stable than crypto assets such as Bitcoin and Ethereum.
Investors who are not willing to risk too much can opt for the stock market instead of the cryptocurrency market.
2- Free from the pump and dumps: The crypto market is ridiculed with several pumps and dumps. This helps the people who started this pump and dump for a particular asset.
However, anyone who hops on later will have to endure a great loss. Such pump and dumps are illegal in the stock market. Thus, making it a great option to stay away from the pump and dump plague.
3- Regulated and thus safer: You can still get burned in the stocks market. But there are considerable regulations in place, so the risks of someone exit scamming with you investment is far less.
But investing into something that might drop in value by half, yeah there’s still a ‘check’ for that one in the stocks market.
Go Cryptowise could earlier this year report that in a recent survey done by eToro which shows that over 40% of “millennial online traders” appear to have “less faith” in the performance of the traditional stock market – when compared to the digital asset market.
- Almost half of the Millennial online traders have more trust in crypto exchanges than the U.S. stock market
- Approximately 70% of millennials participating in eToro’s poll that was not trading crypto said they would start if more institutions began providing the option to invest in digital assets
Read the full article here
Diversifying makes you better at investing, here’s why
You might have been recommended by others that you should diversify when investing. “Don’t put all of your eggs in one basket“. But you might ask yourself why?
“Diversification is a familiar term to most investors. In the most general sense, it can be summed up with this phrase: “Don’t put all of your eggs in one basket.”Investopedia
Because let’s say you invested all your money into let us say Bitcoin in 2010 at prices of $0.10 then you’d be happy and rich. Or if you picked Apple stocks in 2003 you’d also be very happy today. But making those exact calls. At the right time, and sticking to your choice is near impossible, and done by few (lucky people). So what we suggest is that you should look into diversifying.
- Diversifying between cryptocurrencies and stocks
- Diversifying between different cryptocurrencies
- Diversifying between different stocks
Because: Unless you know how to beat the odds. As in you know the answers to the lotto numbers, which stock will be the next Apple or Google. Or the next Bitcoin or Ethereum. Then you should spread the risks. What happens if all those cryptocurrencies you bought ended up in a failed project? Startups fail all the time.
The SBA states that:
- 30% of new businesses fail during the first two years of being open
- 50% during the first five years
- 66% during the first 10.
- The SBA goes on to state that only 25% make it to 15 years or more.
See diversification and investing as anything else in life, a learning experience. By exploring different options, learning about different markets, projects and businesses we believe you will be an even better investor.
Comparing this to putting all your eggs in to that one basket and hoping for the best.
So stop asking yourself, should I invest in cryptocurrency or stocks? The answer might be both! We believe that it should be more cryptocurrency and stocks.
Because the more you learn about one market, the more experience and ideas you will have for the other market.
- By investing in both you will learn about different types of markets, you will learn about different companies, what makes some successful and others not. These experiences will make you a better investor
- By diversifying between different cryptocurrencies and stocks you will minimise the risks.
- To be a successful ‘investor’ for any type of investment. Whether that’s for stocks, cryptocurrencies, commodities like gold and silver. You need to make ‘smart investments’. And with that we mean, do research before investing. Don’t just jump into any investment because it has risen fast or a friend of a friend told you about.
Use our comparisons tools to buy crypto
If you are interested in buying cryptocurrencies to try it out as an investment, then we have reviewed and listed the most trustworthy cryptocurrency exchanges available. So please feel free to use our comparison tool to find the cryptocurrency exchange for you (follow the link here).
Cryptocurrencies and the stocks have their own share of advantages as well as disadvantages. So, it would be a better option for any investor to spread his funds across both these markets.
By investing more in the market you are familiar with and investing less in the unfamiliar market lets you benefit from both. Since both these markets have been responsible for several Millionaires over the years, both are a great choice of investment.
We hope that you found this guide going through the benefits and differences between cryptocurrencies and stocks helpful. We believe that by diversifying and exploring different options you will both minimise potential risks, and become a much stronger investor.
If you have questions or comment please feel free to leave them here below and we will try and answer them as soon as possible.
In the meantime good luck and be safe.
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- HODL, DYOR, REKT the 41 cryptocurrency terms you need to know!
Per Englund – Founder of Go CryptoWise a cryptocurrency and tech fan that want to see better and smarter products and services that make our lives better and easier