The crypto markets have certainly had a large impact on the younger generations. Everyone seems to want to buy bitcoin, while stocks are increasingly getting a bad reputation. What is really happening? What are the differences between the two investment classes, and how should you tackle them? Let’s take a look at the great debate of crypto vs stocks.

Trading crypto adds a gamified experience

The reason bitcoin and other cryptocurrencies are so popular with the millennial generation is that they add an element of gamification to the experience. All the different types of financial products, the different colorful logos of cryptocurrencies, as well as the use cases and rewards they offer, make the market more interesting and less complex. On the contrary, traditional stock investors find it hard to understand and navigate, as they are used to the strict limitations imposed on stock trading by the regulatory authorities.

Crypto markets offer investors greater freedom of choice

In stock markets, you purchase a stock, which here stands for the part of the company you believe in. If the company or the industry grows in value, so will the price of your stock. On the contrary, cryptocurrencies do not represent a part of the project, but rather the demand of the community to participate in the operations of the project itself. In other words, you don’t own part of the company. However, when it comes to crypto, you have a large number of choices, some a lot safer than others, some a lot riskier than others. It is up to you to decide where you wish to invest in and it is important to understand that with this freedom also comes greater responsibility to do your own research.

Crypto trading never stops

Cryptocurrency trading happens 24/7 and participants do not have to wait for the market to open or close. This is one of the main drawbacks of the stock market, and effectively pushes out many potential investors that would like to participate but find it difficult due to time differences. It was once calculated that the stock market is open a total of 32.5 hours per week, while crypto operates 168 hours per week. If the total amount of hours of bitcoin trading was divided by the current time limitations of the stock market, the industry would exist for more than 40 years, which in turn gives a strong argument for the track record of the crypto markets.

Own the asset vs own a paper representation

It’s important to understand how ETFs work before you start investing. This is also why bitcoin is known to be a payment method that enables investors to “opt-out of the system”. Since cryptocurrencies are digital assets that can’t be copied, users can buy them and transfer them out of an exchange, to their own private wallets. Once in there, they can’t be confiscated by anyone.

On the contrary, the stock market operates either through brokers or retail trading platforms like Robinhood or Revolut. Users then purchase a representation of the stock while the company that offers the trading service holds the actual stock. This leads to a lot of potential problems and limitations, as we saw earlier this year with the temporary halt and selling of GME stock.

Stock markets have lower returns but also lower volatility

Traditional investors often find it shocking to hear of the sudden 20-40% price drops in cryptocurrency assets, mainly caused by sentiment change. This is something they can’t fathom given their risk-adjusted investments that bring in a stable 4-8% annual return. However, it is important to also look at the long-term. Cryptocurrencies go through cycles due to the Bitcoin halving, which is known for changing the sentiment rapidly. In the long-term, however, cryptocurrency prices increase much more sustainably than stocks.

That said, cryptocurrencies are not “better” because of this feature. It is simply a different market dynamic. What is better in cryptocurrencies, and in many ways less risky in the long term, is the ability to unpeg from the US dollar, something which is currently impossible with the stock markets.

Stock markets are more complex overall

Getting into cryptocurrency is a lot easier than getting into the stock market. That is unless you are using the same app for both, which is a trend that is currently building up. When we say that an industry or trading method is complex, we refer to both the financial products, the research methodologies followed, and the ability to predict market movement over longer periods of time. In many ways, cryptocurrencies seem more fun to learn, easier to understand, and easy to get out of if you find it doesn’t work for you. Stock markets are more of a long-term game, with a few choices that are known to perform well, and many that are often left untouched.


This article was written by Julia Beyers

About the Author:

Acquiring a wealth of experience in writing articles on trends and prospects for the development of the game industry in the world I’ve found myself as a Freelance Journalist. I am writing now about blockchain and cryptocurrencies trends, sometimes covering the importance of bitcoin for various other industries.


Featured Image Credits: Pixabay