Cryptocurrency vs Stocks: What’s the Difference?

Stocks are a very well studied and respected investment product. Tons of people were able to successfully improve their finances by investing in stocks. Stocks of companies like Apple, Tesla or Google have increased in prices tremendously, and their success speaks for itself.

One of the reasons that stock investing has become so popular is that anyone can do it. You no longer need to open a brokerage account or invest large sums of money to get started. Investment platforms for retail investors empower you to buy stocks with a mobile app as easily as ordering a pizza.

In other words, stocks are generally considered a very secure investment. However, that is not necessarily the truth. Just because some stock increased in price in the past, doesn’t mean that it will keep increasing in price in the future.

On the other hand, cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH) are considered to be more cutting-edge and innovative. Many people believe that cryptocurrency is only for the young and tech-savvy. But this is also a misconception – crypto has been around for well over a decade, and nowadays you can invest in crypto as easily as in stocks, even if you don’t have any technical knowledge. So what should you actually choose?

Crypto vs Stocks: Advantages and Disadvantages

From the investors perspective, cryptocurrencies and stocks can be quite similar. You can even invest in both stocks and crypto from the same app, as most stock investment platforms with stocks now provide the option to buy cryptocurrencies.

When it comes to risk, both cryptocurrency and equities are pretty similar. Technically, all investments involve some level of risk. Whether you buy cryptocurrency or equities, you should be aware that the market does not always go up, and you should only invest what you can afford to lose.

However, just because they are comparable does not imply that investing in cryptocurrencies is the same as investing in equities. Before you decide whether to buy cryptocurrencies vs stocks, you need to be aware of certain key distinctions.

The most significant advantage of crypto is that it provides you with an actual ownership of digital assets stored on the blockchain. This means that when you buy cryptocurrencies, you can transfer them to your personal crypto wallet and store them securely for as long as you want. 

The fact that you can withdraw crypto from the exchange and store it in your wallet is one of the biggest differences between cryptocurrencies and stocks. There are crypto wallets but there are no “stock wallets” – when you invest in stocks, your funds are being locked for a certain time at a third party platform.

In other words, cryptocurrencies have the advantage of being a very resilient form of a long-term investment. A stock investing platform can have downtime or other technical problems, which could prevent you from accessing your assets. Cryptocurrencies in your personal wallet are yours and yours only – nobody else but you has any control over them, and you can do with your crypto whatever you want and whenever you want.

However, it doesn’t mean that the cryptocurrency vs stocks debate has a clear winner. Investors who choose to buy equities also point out certain disadvantages of cryptocurrency. Above all, cryptocurrencies are typically significantly more volatile than stocks.

The stock market is generally more predictable than the cryptocurrency market. Of course, the stock market can rise and fall, but the price swings are rarely as dramatic. Stock prices rarely fluctuate by more than a few percent per day.

The crypto market, on the other hand, is recognized for its tremendous volatility. Because cryptocurrency prices fluctuate frequently, your investment could increase or fall dramatically in a single day. As a result, investing in cryptocurrencies needs a great deal of patience, because when values fall, you must wait for them to rise again.

Do You Really Have to Pick One?

When deciding whether to invest in cryptocurrency or stocks, there is one key question to consider: do you have to choose only one and invest in either cryptocurrency or stocks?

Sure, some investors buy only stocks or only cryptocurrency. However, most financial experts and experienced investors choose a different approach. They intend to diversify their wealth by investing in both stocks and cryptocurrency.

Diversifying your asset portfolio by purchasing both equities and cryptocurrency might be a great investing strategy. It allows you to boost your potential return on investment by rapidly appreciating digital assets, but it also allows you to significantly reduce your risks.

Both the stock market and the cryptocurrency market are subject to price fluctuations and devaluations. However, by investing in both crypto and equities, you can reduce elements that can harm your portfolio, including volatility and other market risks.

Conclusion

When we compare crypto and stocks, it becomes clear that you really don’t have to pick just one asset in the cryptocurrency vs stocks debate. Both of these asset classes can be very profitable, and both have their unique advantages. For example, stocks are less volatile, but crypto can be securely stored in your personal wallet. As a result, most financial professionals recommend diversifying your assets – by purchasing both cryptocurrency and equities, you may create a diverse portfolio that will allow you to maximize your potential return while minimizing your risks.