Stocks vs. Crypto – What’s the Difference
Another question that worries young investors and those new to the crypto industry many people have probably heard is “If you want to invest, go play stocks” but when the cryptocurrency industry began to grow more and more. It has begun to recommend investing in crypto instead. So today we are going to look at the difference between stocks and cryptocurrencies in terms of investment. What are the same and different points?
Similarity Between Cryptocurrency & Stocks
Before we get into the differences between stocks and cryptocurrencies, we first need to understand the fundamentals of these two asset classes. The details are as follows.
- Driven by demand
The value of both cryptos and stocks depends on the same factor: volume of demand. Or the demand for the purchase of the market itself making a profit from trading stocks or cryptocurrencies is called “speculation” or is choosing to buy in a certain price range. Wait for the price to rise in the future in order to sell and profit from the difference between the purchase price and the sale price
Suppose if a crypto coin was created with an interesting idea or purpose for better investment. There would be a demand to buy or demand for that coin that is very high. Like a company with good performance and solid fundamentals, it is in demand among investors. Interestingly, it is this that causes the volume of demand to change both negatively and positively. This includes any news that may affect the credibility of the company or the coin itself.
- Value Tied To Fiat
It is undeniable that the value of cryptocurrencies and stocks also needs to be compared to fiat currencies like the dollar, dollar or euro to make comparisons easy, because fiat is also widely used.
- Buy-sell through the app
If you are a person who has traded stocks or other types of assets such as gold, oil or currency before you should be familiar with using crypto trading applications as well. Because whether it is the use of price analysis charts Sending orders, using indicators is almost the same.
Difference Between Stocks & Cryptocurrency
Now that we understand the fundamentals of the two assets, let’s take a look at what’s different and which investor is right for you:
If you compare the volatility of the price Analysts and speculative experts agree that cryptocurrencies are more volatile than stocks possibly because cryptocurrencies have a shorter duration. Because of its open-source crypto, anyone with programming knowledge can copy the source code and build a network. New Cryptocurrency can be created. It is necessary to submit a claim to the relevant authorities for a risk assessment. A company to be able to enter the stock market needs a certain level of reputation and stability to be recognized.
Buying shares is like giving our money to companies to invest. If successful the company will distribute profits to shareholders in proportion to the shares they hold also known as dividends (Dividend) but in the crypto industry. If it’s not speculation, then Growing coins can be achieved through mining for a crypto-network. Proof-of-work such as Bitcoin, Ethereum requires additional investment in mining machines and electricity costs. Alternatively, it is known as the Coin Stake. Proof-of-Stake, such as polka dot cryptocurrency Stellar, where a certain amount of holding coins (Staking) must be locked on the network and await the return of the verifier.
This is because most stocks can only be traded during stock market hours. Some may not be able to trade on Saturday – Sunday. And the market is usually closed for national holidays. While stocks can be traded 24 hours a day through futures contracts, heavy market movements tend to occur during most markets, while cryptocurrencies are networks without intermediaries so there is no need to wait for anyone to open the service. Trading is therefore possible 24 hours a day, 7 days a week and no holidays are involved
Investing in cryptocurrencies has a minimum cost that is much lower than stocks. For example, Bitcoin and solana investors do not need to start buying a minimum of 1 Bitcoin (currently priced around 410,000 dollar per 1 Bitcoin), but can. Buy in sub units up to 0.00000001 Bitcoin, also known as 1 Satoshi (about 0.004 dollar), depending on the policy of each trading board.
While most stocks are required to be purchased at a minimum of 100 shares (depending on the broker’s policy), let’s say one share is valued at $50. Multiplying the stock value and the minimum number of shares means buying the shares requires substantial capital less than 5,000 dollar
According to the factors mentioned above it is quite obvious that investing in crypto is much riskier than investing in stocks. And there are also quite different ways to make your investment grow. The advantages and disadvantages of investing in each asset can be divided into the following:
If you look at another angle Cryptocurrency has more frequent emergence and higher volatility in price, perhaps a profit opportunity for some investors. But you should always be aware of whether it’s stocks or crypto. Investments are always risky. Therefore, investors must know how to assess their assets well. Study and understand the asset before making a decision. Whether investing in any asset, choosing a reliable trading board should be one of the first things investors should consider.