Ever wonder how cryptocurrencies stack up with other investment products like stocks and bonds? Here’s the rundown.
Ownership
When you buy shares from the stock market, you essentially get to own a small part of that company and become entitled to legal rights (e.g., dividends). However, you need proper documentation such as stock or shares certificates. They’re not absolutely necessary nowadays, but they’re useful when you want to transfer ownership.
On the other hand, when you buy a cryptocurrency, you don’t become a shareholder of the issuer’s company. Instead, you’ll receive digital currency stored in a digital wallet. There’s no need for paper documentation since the records are all online and published on the blockchain. This is why it’s actually easier to own cryptocurrency than stocks.
Value
When you buy shares, their value will depend on how well the company is doing. If the economy tanks, the value of your shares will also likely tank.
Meanwhile, the value of cryptocurrency depends on demand. The more people who want or trade with that crypto token, the more valuable it can get. This is why Bitcoin is worth millions—it’s so popular, everyone wants to invest in it!
Access
Traditional stock trading follows strict business hours. In the Philippines, the stock exchange is open Monday through Friday from 9:30 am to 2:45 pm, with a 1-hour break from 12:00 pm to 1:00 pm. If you don’t make it on time, you can no longer trade on that day.
With crypto, you can trade at any time—even on holidays! Everything is hosted online, so crypto exchanges are literally open 24/7. This means that you can take advantage of every opportunity to invest and maximize the way you grow your money.
Number of Shares
A publicly traded company can issue as many shares as they want, as long as they follow relevant laws and their internal regulations. This is perfectly fine but there’s also a chance that the market will be diluted with too many stocks. This can cause the price to dip.
This is not the case with crypto. In fact, those who run crypto projects can set a hard cap on their supply. For example, only 21 million Bitcoins can exist at any given time. This is what boosts its value and protects it from inflation.
Interest
If you invest in bonds from a third party (usually the government or a private company), it’s like you’re giving them a loan. You’ll earn money via interest as the third party pays back the loan. The problem with this is that there’s a risk that the third party may not be able to pay, so you can lose your investment.
With cryptocurrency, well, this isn’t a problem at all!
Liquidity
When you invest in stocks or other traditional products, you may encounter some difficulties converting them back to cash in an instant. On the other hand, cryptocurrency is extremely liquid. That’s why if you have an emergency, you can almost instantaneously exchange your tokens back to traditional currency.
Start crypto trading today with the help of Maya Invest!
References:
Cryptocurrency vs Stock Market: What’s the difference? (cointree.com)
Crypto Trading vs. Stock Trading: Compared | Gemini
Cryptocurrency Vs Traditional Investing Options: Know The Differences (ndtv.com)
What’s the difference between trading cryptocurrency and stocks? (yahoo.com)
