The differences between cryptocurrencies and stocks

Which is better – stocks or cryptocurrencies?

There are two ways of investing: a traditional way of investing capital – investing in stocks; and a relatively new direction – investing in cryptocurrencies.

Shares have been for several centuries and have a certain reliability status, while cryptocurrencies have only emerged recently.

Meanwhile, the important thing is not which of these assets is better but what form of investment suits their goals. It is also equally important what results are expected to be achieved and for what period.

It is well known that shares are backed by company assets or physical money, but this does not apply to cryptocurrency. The cryptocurrency market is young and proliferating, which implies a lot of volatility in this market. The question “What is better?” is difficult to answer objectively, as it depends mainly on the personal motives of investors.

In 2021, CNBC found that half of the millionaires have already invested at least 25% of their wealth in cryptocurrency. So should you invest in stocks or cryptocurrencies? It all depends on you.  

Do cryptocurrencies function as stocks?

Investing in stocks works differently than investing in cryptocurrencies. However, both have their advantages and disadvantages.

Cryptocurrencies and stocks are used to create wealth, but their investment method, as mentioned above, is entirely different. When you invest in stocks, you become a particular company co-owner, called a shareholder.

You can buy shares during the exchange’s opening hours. Then, if the stock you invested in performs well, you will also receive a dividend. Dividends can be held as cash or reinvested to accumulate more shares by investors who receive them.

The stock market is rigorous in-laws and regulations, with all the appropriate penalties for non-compliance. On the other hand, the cryptocurrency market does not need to deal with international laws and regulations; the market is open around the clock, seven days a week. In addition, cryptocurrencies do not give you ownership of any assets and do not imply the payment of dividends. Instead, you can place your tokens to earn passive income.

You can easily do it if you want to start investing in cryptocurrencies. At the same time, central banks do not control digital coins, allowing you to make anonymous transactions at lightning speed and bypass such economic trends as inflation.

Is cryptocurrency a good investment in 2022?

If you plan to invest in cryptocurrencies, you should be aware of the risks and benefits of the cryptocurrency market.

Whether cryptocurrency is a good investment in 2022 or not is also a subjective topic. However, there has been a breakthrough in normalizing the crypto market in recent years.

However, today cryptocurrencies are not widely used to provide for everyday needs, such as buying groceries or paying rent. Therefore, regulation of the crypto market will provide convenience on the one hand and bring restrictions on the other.

For example, the government can penetrate the crypto infrastructure and monitor crypto activity with regulation. As a result, anonymity will decrease, and the era of taxation of your crypto assets will begin.

If you are willing to invest in cryptocurrencies, you should know the increased risks and potentially high returns.

Are shares a good investment in 2022?

Since the stock market is as unpredictable as the cryptocurrency market, constantly conduct an independent analysis and be aware of the risks.

No one can see into the future, so you can never be sure of your investment. Shares are attractive for those who want to make long-term investments. We live in exciting times, and many factors will affect the economy in 2022. For example, the COVID-19 pandemic and geopolitical tensions have led to market inflation.

Because of this, the stock market is also experiencing a lot of volatility along with the cryptocurrency market. Therefore, it is impossible to predict the stock price.

If you want to invest in stocks, immerse yourself in market movements and economic trends and be well informed. There are no risk-free investments, even in the stock market.

What is the difference between cryptocurrency trading and stock trading?

Both cryptocurrencies and stock markets are unstable and subject to external influences. However, there are also differences between them.

There is a big difference in how cryptocurrencies and stocks are traded. For example, you can buy cryptocurrencies on a cryptocurrency exchange and stores them on a stock exchange. There are also differences in trading conditions on sales and operation hours.  

Usually, the cryptocurrency market is more volatile than the stock market. However, the stock market is also volatile due to changes in interest rates and uncertain situations such as geopolitical tensions, the rate of inflation, and changes in monetary policy. So, is there a difference in commission costs when trading cryptocurrencies and stocks?

There are no transaction fees in the cryptocurrency market since it is decentralized. However, you pay for “gas” (commission) to reward miners and validators who ensure the security of transactions on the network.

The stock market charges transaction fees, such as brokerage fees, exchange fees, depository fees, etc. Still, often you can trade for free on specific platforms, such as eToro, which do not charge a commission for trading stocks.

Investing in cryptocurrency for beginners.

Conduct your analysis and follow the step-by-step plan for buying cryptocurrency.

When you decide to start investing in cryptocurrency, you need to understand what you are doing and what you are investing in. There are well-known currencies on the market, such as Bitcoin (BTC) and Ethereum (ETH), but many altcoins are also.

Not all coins have value, and you need to keep a close eye on your portfolio to respond in time.

“Buy low and sell high” – is the main slogan of trading, but it may not be so easy for inexperienced traders. You mustn’t invest money you are unprepared to lose with stocks and cryptocurrencies because investing always involves risk.

Do you want to start investing in cryptocurrency as a beginner? Then, follow these steps to get started.

Step-by-step instructions on how to start investing in cryptocurrency

1. Analyze the coins you want to buy;
2. Decide on the amount you are willing to invest in the selected coins;
3. Register on a crypto exchange;
4. Add the required amount to the crypto exchange;
5. Buy the selected cryptocurrency;
6. Keep your cryptocurrency in a crypto wallet.

Investment in stocks for beginners.

Do your analysis and follow the step-by-step plan for buying shares.

Various investors are active in the crypto market. Some invest for the short term and sell their coins when the price rises. In addition, some holders prefer to invest their money for a more extended period. In the stock market, the principle of “quick win” does not work because of the advantages of compound interest.

Do you want to start investing in stocks as a beginner? Then first, think about whether you want to build a portfolio and trade it yourself or whether you want a professional to manage the process. Finally, have you decided to start investing on your own?

Step-by-step instructions on how to start investing in stocks

1. Open an account with a broker;
2. Choose whether you want to invest in stocks or ETFs;
3. Determine the amount you are willing to freeze for a long time;
4. Invest for a long time;
5. Keep track of your investments.

The future of cryptocurrency.

Cryptocurrency may become a future replacement for fiat money, but only time will tell.

The current financial system is fragile and virtually obsolete. Moreover, the system no longer meets consumers’ needs, who increasingly demand innovative products and advanced functionality. Deutsche Bank’s Imagine 2030 report predicts that more than 200 million users will be using digital currencies by 2030.

Although cryptocurrency is still an addition to the standard financial system today, it may become a replacement in the future. Cash is already becoming increasingly rare, and the ability to access your digital money anywhere in the world would be very welcome for most users.

Cryptocurrency allows users to manage their money, which is only part of the new financial system’s opportunities.

Stocks or cryptocurrencies – which is more reliable?

If you know the risks and consciously accept them, stocks and cryptocurrencies are safe to trade.

Where is more risk – in cryptocurrency or stocks? First, of course, the cryptocurrency market is highly volatile and new. Stocks are a more traditional investment vehicle but are also highly flammable. Today, many people have invested part of their fortune in cryptocurrencies.

It is unwise to use the crypto market for quick earnings. But many coins can be used to make fast money, but at the same time, there is a high risk of losses.

Meanwhile, the essential thing in investing is to avoid using funds that you can’t afford to lose and to be aware of the risks associated with these investments. These risks may be large or small, and there are no guarantees. So, to analyze and experiment, try different strategies, and prepare for a roller coaster ride.     

You can invest in company stocks and cryptocurrencies using the services of the largest CFD brokers, Forex.com and CityIndex, online broker Plus500, online trading platforms eToro and AvaTrade, and social and copy trading platform ZuluTrade. 

On our website (links), you can learn how to register on any specified trading brokerage platforms, open a trading account, choose a suitable financial instrument, study the offered trading conditions and rewards of any of them, and start trading directly.

? Best Online Brokers Editor’s Pick

Relevant news