Stocks have been around for centuries, while cryptocurrency has only existed for a little over a decade. Bitcoin was established in 2009, and we’re still in the early stages of the crypto movement. However, prices for both investments are determined by market forces.
When you buy a share of stock, you’re investing in a particular company that you believe will continue to grow in the future. With cryptocurrencies, you may buy tokens of a particular currency to use them as a form of payment, or you might simply hold on to them in hopes that they increase in value.
Cryptocurrencies don’t trade on traditional stock exchanges. To invest in crypto, you’ll need to use a crypto exchange and store your tokens in a digital wallet. In other words, you can’t buy and sell crypto like you would trade a stock.
The advantage of investing in cryptocurrency over stocks is that there’s greater potential for reward. Ethereum, for example, has seen its price increase by 1,200% over the past year. The S&P 500, on the other hand, is “only” up around 42% over the past year.
Cryptocurrency is a relatively new phenomenon, and nobody knows what the future holds. While it could be the next big thing, it could just as easily flop. So, although you could make a lot of money with crypto, you could also lose everything.
Between stocks and cryptocurrency, stocks are generally the safer option. But that doesn’t mean you can’t invest in crypto. Just be sure you have a high tolerance for risk, a well-diversified portfolio, and are only investing money you can afford to lose. By doing your research and choosing your investments carefully, it will be easier to balance risk and reward.