To the seasoned trader or investor, debating between shares and cryptocurrencies might seem like a no-brainer. After all, just a few short years ago cryptocurrency seemed like nothing short of a footnote compared to an institution that’s over a hundred years old. However, cryptos have proven to be quite formidable to the point that in January of 2023, its total value surpassed the $1 trillion mark.
We all know that nowadays, cryptocurrencies are surrounded with huge hype, and that’s one of the reasons people are getting more interested in them, forgetting that there were some other things in the past, that is still more stable than them, and make a huge difference in trading approach. Of course, we understand why you are probably more interested in cryptos, especially if you aren’t experienced in any other similar activity. They are very popular and they grab all the attention.
However, despite such incredible growth, it’s important to note that there are major differences between shares and cryptos.
A quick review of shares and cryptos
A share or a stock represents a portion of a business. A share price is indicative of the value or perceived value of a business or company. Cryptocurrencies represent various digital assets and when you buy cryptocurrency, you’re purchasing a fixed amount of the currency. The value of cryptocurrency is determined by a number of factors such as supply and demand and at times the underlying technology (blockchain) that powers the currency.
Major differences between shares and cryptos
Typically, in order to own or buy stock, you need a brokerage account. Also, you need to buy a fixed amount of stock, meaning that ownership can be prohibitively expensive. The only way around ownership is to open a share trading account at a trustworthy broker that allow for speculation and spread betting.
This way you can estimate on the stock price of a company without actually purchasing the stock. The profits can be good and the start-up capital can be much less. If you want to find your broker, visit cityindex.co.uk. If you value your privacy, then cryptocurrency will give you the anonymity you seek. All your cryptos can be kept in a digital wallet or a USB stick.
However, there are potential pitfalls to achieving this kind of privacy such as losing your cryptos to hackers or losing your password credentials. You could also misplace the USB and lose all your money.
Time and legacy plays a large role in the reputation of most things. Stock exchanges have existed for more than two centuries, most famously on Wall Street. Cryptocurrency on the other hand only came into existence with the rise of Bitcoin in 2009. In January of 2023 cryptos had a value of $1 trillion while the Nasdaq, which is but one small segment of the global stock market had a trading volume 5 times larger.
Whether you’re buying cryptos or stocks, you’re going to encounter volatility as both assets possess the capacity to go up or down in value and it’s almost impossible to time the market just right, knowing when or when not to buy.
While the stock market is well-known for its volatile nature, the greater market has seen an upward trajectory over the past decades and because stocks are publicly traded, investors are privy to various sources of information which can help to make more informed decisions.
Cryptocurrencies on the other hand are more prone to wild, sudden and drastic changes and sometimes without any warning signs. This means that the odds of huge wins are possible within a short span of time, but then so are the losses. In past over 1600 types of crypto have up and vanished and while a public company can go bankrupt, its far less likely to lose all its value in one sweep.
So, which one is better?
It’s so difficult to answer questions like this, but we tried to cover the essential aspects of the differences between them. The Crypto market is growing stronger every day, but stocks are already here and highly recognizable to all people.
The investors and traders know how to measure and estimate the potential risk, and the rewards, of course. But, this whole thing resembles to gambling more than it’s investing by itself.
We have already mentioned the critical differences earlier in the text. The diversity of both options is huge, with of course there being many more cryptocurrencies than companies you can invest in, but you should also keep in mind that not every cryptocurrency is available for trading at the moment.
The way you make money is also crucial. For example, by selling shares for a higher price than you bought them, by holding and collecting dividends, or by capital gains. It is similar to cryptocurrencies, but there are still many differences because the concept is different. The crypto market is still evolving, even though it has been around for over a decade.
Shares are subject to the financial sector, while cryptocurrencies are a more technical aspect of things. To begin with, you need to understand those differences yourself, to be aware of what expectations you should have and what are potential benefits that you would have from your activity.
It is now up to you to decide whether you want a stable investment or an attractive one. We know that cryptocurrencies bring more excitement, but with great excitement comes a big risk. It is also up to you to decide whether you want to risk losing money or still play safe.
Investors, especially those who are more experienced in this field, always want a mix of stability and excitement, so you will often see them active in more markets. But beginners need to play more confidently and stable while getting used to the different concepts. That is, we could say that everyone should decide for themselves what their goal is and what are funds they want to invest in that goal.
It is up to us to wish you to be smart and determined in what you do, but also not to succumb to the great excitement that comes with all the money investments. Crypto or stock? It’s up to you, now that you know the key aspects of both activities.
Note that cryptocurrencies do not have a centralized exchange system and go directly from buyer to seller and vice versa. This is not the case with stocks, because there is a stock exchange where you trade.