Crypto Vs. Stocks

Good day everyone and welcome to my post. Have you ever wondered which would be the better option, crypto or stock? Well, stick with me to find out.

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Let’s imagine a little, shall we?

Imagine walking into a supermarket to restock your groceries and on your way out, you got to find out of a lottery ticket advert and decide to buy one to test your luck. You peel it off, and then after you’ve cross-checked a thousand times over and blinked twice, you realise that you’ve just become a millionaire, you won the lottery.

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At first, you'd scream for joy, obviously, like most people would. After the celebration and jubilation, you'd surely be left with thoughts on what move to make next.

Surely you'll be left with thoughts on how to multiply this newly found wealth and investment options would come to light, whether you invest it in crypto or in stocks.

I'm sure know what stocks are;

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But if you don’t know, they’re shares you buy from companies to gain a part of its ownership. Shares differ and depending on the type of organisation, they can also be referred to as securities or equities.

The amount of stock you can hold is usually equal to a corresponding share of the company at the time being.

For example, let’s assume OmarsBakeryNg decides to sell 10,000 shares at 1$ per share. If you choose to spend $1000 on their stocks, you’ll officially own 100 shares. These shares you’ve bought can either increase or decrease in value based on the company’s performance in the stock market during the time.

At a set date, OmarsBakeryNg will pay a ‘dividend’ – a share of the company’s profits paid to the shareholder based on the number of stocks you own. Sounds like a solid plan, doesn’t it?

Now, let’s talk about crypto;

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Cryptocurrency is a digital currency used to trade or exchange goods and services of which it is decentralised - they don't stand for individuals, organizations or governments.

If you'd like to invest in crypto, you’ll need to buy one through an online exchange platform; where various crypto are bought and sold.

When a cryptocurrency is purchased, it is stored in a private digital wallet of which only you can access.

Crypto Investments aren't calculated according to shares because they're decentralised, unlike stocks.

Think of it as keeping your money in another foreign currency, only that this currency is digital and is not under the control of anyone. Also, holding certain crypto like Bitcoin or Ethereum can also be seen as an investment because they tend to increase in value over time based on the crypto market.

Here's an example, if you purchase $1000 worth of Bitcoin, you won't receive dividends and the value of your investment lied on the performance of the crypto market. Thus, if the price of Bitcoin goes up by 5%, that means your asset is now worth $1050. Whereas if it dips by 3%, the value drops to $970

Sounds a bit erratic, right? Well, that’s often how the nature of the cryptocurrency market usually is.

SIMILARITIES AND DIFFERENCES

Now that you have understood the basics of both crypto and stocks, it's time to decide the best option for investing your wealth on. To make this easier, you need to know and understand the differences and similarities between crypto and stocks. They are:

• Stocks are shares that a company can give out, while crypto is a digital currency. You can use cryptocurrencies like bitcoin an an exchange for both goods and services. Stocks need to be converted to raw cash in order to be used for transactions.

• Stocks and crypto are both traded via an online exchange platform. Some exchange platforms focuses on Crypto alone while others offer both stocks and crypto trading services.

• Crypto prices are so unpredictable as opposed to stock prices. For instance, some crypto prices can rise and fall exponentially in a single day. This happens because the crypto market is unregulated and depends on the laws of demand and supply. Unlike crypto, stocks are regulated and the prices doesn't rise or fall rapidly in a single day.
  

  

So, what are the merits or demerits of investing in stock or crypto?

Let’s start with stocks.

MERITS

• Stocks gives you the privilege of investing in as many companies as you choose.
• Stocks are regulated and therefore, it's not volatile.
• Stocks have the potentials of producing strong returns over a period of time
• Due to its regulation, shareholders are protected against fraud or market manipulation.

DEMERITS

• Stock prices are easily influenced by social and political events so it's likely that the prices are affected even when there's no connection between the company and the event itself.

• Stocks do take time to mature so you need to be patient before you start receiving high profits from your investment
  

  

Cryptocurrencies have their peculiarities too;

MERITS

• Cryptocurrencies are decentralised, I'm sure you know what that means. This saves you from the stress and rigours which has to do with the banking systems.

• Thanks to the volatile nature of crypto, you can double your wealth from a single trade. It's has high potential for massive gains

DEMERITS

• Just as you can double your wealth with crypto, you can also lose it the same way. It's prices are highly unpredictable.

• The cryto world is risky as you tend to face cyber-criminals or hackers due to its digital nature.

• Crypto do not hold the same value as stocks do because stocks are actual shares of an actual company. Many of these cryptocurrencies aren't backed up by physical assets, so in turn, they can only by utilized digitally.
  

  

CONCLUSION

With the post done and dusted, here is my final verdict:

Stocks are a lesser risky investment compared to crypto. Although crypto offer better opportunities to yield solid profits. You should strive to spread your portfolio between crypto and stocks in order to achieve a good investment balance.

Always remember to invest a portion of your wealth you can afford to lose I'm either of the above options that way you have something to fall back to.

Thanks for reading and good luck.

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Yours always,
@chikezie4l