If you’re like most people, you probably have a few bucks saved that you want to invest. But should you invest your money in stocks or cryptocurrencies? Both have their pros and cons, so it can be difficult to decide which is the right choice for you. In this blog post, we compare investing in crypto vs stocks and help you decide which is the better option for you!
Get investment advice
If you’re thinking about investing in either cryptocurrency or stocks, it’s important to seek professional advice first. Both options come with a lot of risks, and you don’t want to make any decisions without knowing all the facts. Talk to a financial advisor or two and see what they think before making any final decisions. For example, as this Motley Fool review states, “You should only invest in stocks — or any other investment — if you’re willing to lose your entire initial investment.” So always do your research before you buy!
When it comes to investing in crypto vs stocks, there are a few key differences to keep in mind. For one, cryptocurrency is a much newer industry than the stock market. This means that there is more growth potential in the crypto world, but also more risks. The stock market, on the other hand, is much more stable but doesn’t offer as much potential for huge gains.
Crypto is a possible hedge against fiat currency
Cryptocurrencies can provide a hedge against fiat currencies. Fiat currency is government-issued legal tender whose value is guaranteed by the issuing government. The value of fiat currencies can be volatile due to factors such as inflation, economic growth and political stability.
Cryptocurrencies, on the other hand, are not subject to the same volatility risks. Their value is based on the underlying technology, which is not subject to government control. Therefore, investing in cryptocurrencies can provide a way to hedge against the volatility of fiat currencies.
Stocks have a history of solid returns
Investing in stocks has historically been a solid investment, with returns averaging around seven percent per year. When you compare this to the average cryptocurrency yield, which is around three percent, it’s easy to see why some investors might be hesitant to invest their money in crypto. However, there are some key differences between the two investments that you should consider before making a decision.
For one thing, stocks are much more regulated than cryptocurrencies. This means investors are better protected in case of fraud or mismanagement by the company. Additionally, stocks are traded on centralized exchanges, allowing for more liquidity and easier trading.
Cryptocurrency, on the other hand, is a decentralized asset. That means it’s not subject to the same regulations as stocks. Additionally, crypto is often traded on decentralized exchanges, which can be less liquid and more difficult to trade.
Crypto can be extremely volatile
Crypto has been one of the most volatile asset classes in the world in recent years. In 2017, bitcoin surged from around $900 to nearly $20,000 before crashing back down to around $12,000. Ethereum saw similar gains and losses during this period.
While such returns are certainly possible in stocks, they are much rarer. In 2017, the S&P 500 gained around 19%. That’s a great return, but it’s a far cry from the profits made in crypto.
Of course, those same volatility levels also mean that you can lose as much money as easily as you can make it. There are many companies in the stock market that have gone bankrupt and wiped out their shareholders. So if you are thinking about investing in crypto, you need to be prepared that your investment could go to zero. You have to be willing to take that risk.
Stocks have less potential for extreme gains
When it comes to potential gains, stocks have less upside potential than cryptocurrencies. While a company’s stock can triple or quadruple in value over time, it’s unlikely to increase in value ten or twenty times. On the other hand, cryptocurrency has the potential for much more extreme gains. For example, the value of bitcoin increased by over 1000% in 2017. While there is no guarantee that any cryptocurrency will experience such growth, the potential is certainly there.
Investing in cryptocurrency can also be a more efficient use of your investment funds. This is because you can buy a fraction of a coin instead of having to buy a whole share. So if bitcoin cost $15,000 per coin and you only had $500 to invest, you could buy 0.033 of a bitcoin. However, if you want to buy a stock that costs $15,000 per share, you would have to buy the entire stock. This means your investment dollars can go further when investing in cryptocurrency.
Of course, investing in cryptocurrency comes with its own set of risks. The most obvious risk is that the value of your coins could go down rather than up. Cryptocurrency is also a fairly new investment opportunity, which means less information is available about it. This can make it more difficult to predict how it will develop in the future.
Stocks have intrinsic value
Many people consider cryptocurrency worth nothing because it has no physical form. However, stocks also have no physical form but are considered more valuable. This is because stocks represent a company that has intrinsic value. That means the stock represents something someone is actually willing to pay for.
On the other hand, cryptocurrency has no intrinsic value. This is because it isn’t backed by anything tangible. There is no company or product that represents it. Instead, crypto is simply a digital asset that people are willing to exchange for other assets.
So when deciding whether to invest in crypto or stocks, you need to ask yourself which is more likely to appreciate in value. If you think a company has the potential to grow and generate more revenue, then investing in its stock would be a good bet.
In summary, there are pros and cons to investing in both crypto and stocks. You must decide which is right for you based on your own investment goals and risk tolerance. If you are willing to take on more risk, cryptocurrency may offer the potential for greater rewards. However, if you prefer a more stable investment, stocks may be a better choice.