Stocks vs Cryptocurrencies: Which is Better?
Crypto, Knowledge

Stocks vs Cryptocurrencies: Which is Better for You?

Since the introduction of cryptocurrencies, investors have been facing the dilemma of choosing between stocks and cryptocurrencies for fulfilling their investment choices. While cryptocurrencies may come across investors as a way of making instant profits, stocks on the other hand, offer long-term investment solutions to the investors. However, we can not say that cryptocurrencies should not be a part of your long-term investment strategy. So, how should investors approach cryptocurrencies and stocks simultaneously for including them in their investment portfolio? Should short-term investors consider investing their money in stocks? Let’s discuss in this article whether to choose stocks vs cryptocurrencies.

What are Stocks?

Stocks are a type of securities that represent the shares of a company’s assets and its cash flow. So, when a person buys stocks of a company, they are owning a share of the company’s profits. In other words, owning stocks of a company gives part ownership of the company to the investors. The first stock exchange of the United States was founded in the year 1790. Since then, various countries began forming their countrywide stock exchanges. The stock exchanges are the places where the stocks of different companies appear for sale. 

Advantages of Investing in Stocks vs Cryptocurrencies

  • Stocks are historical and have generated annual returns of up to 10% in the long-term. Therefore, people look upon stocks for the perfect long-term investment option.
  • Stocks hold some intrinsic value in the form of success of the company and its cash flow. So, even if the stocks reduce in value, they will still hold some practical value for the shareholder. 
  • Stocks have regulating authorities in the form of national or international governments. This reduces the scope of fluctuations in the prices of stocks over a short period of time.

Disadvantages of Investing in Stocks vs Cryptocurrencies

  • Stocks are less volatile. So they do not offer any potential for short-term gains. 
  • The fact that stocks are regulated by authorities and the capital gains can be tracked, puts investors in a position to pay taxes.

What are Cryptocurrencies?

Cryptocurrencies are digital currencies which occur through the process of mining. Different companies come together and power the process of mining of the cryptocurrencies. There are four main types of consensus algorithms that allow the mining of cryptocurrencies. The consensus algorithms include Proof of Work, Proof of Stake, Proof of History, and the Proof of Elapsed Time. Early cryptocurrencies like Bitcoin, Ethereum have been born out of the Proof of Work algorithm whereas newer projects like IOTA, Cardano are using Proof of Stake algorithm. 

Advantages of Investing in Cryptocurrencies

  • Cryptocurrencies are decentralized ways of investment and generating gains. Since there is no national or international body governing them or putting taxes on them. This is one of the reasons why investors are largely feeling attracted to them.
  • Cryptocurrencies are an ideal choice for investors looking to gain outsized gains in a short period of time. As cryptocurrencies are not regulated by any authority, the prices are extremely volatile and hence, there is a lot of scope for generating huge profits.
  • In contrast to the inception of cryptocurrencies when there were only a limited number of projects that the investors could invest in, at present, there are thousands of projects to choose from. 
  • As cryptocurrencies aren’t backed by fiat currencies, they provide a hedge against factors that may affect the value of fiat currencies like inflation. 

Disadvantages of Investing in Cryptocurrencies

  • Cryptocurrencies have no intrinsic value. This means that the price of the cryptocurrencies are solely determined by their supply, demand, and their utility in the real world. 
  • The prices of cryptocurrencies are extremely volatile and keep changing in a matter of a few minutes. This poses a considerable risk and uncertainty in the investment portfolios of investors. 
  • Even though the forming bodies of the crypto projects take hard actions to ensure the security of tokens, there have been noteworthy instances where cryptocurrencies worth billions have been stolen. 

Key Differences between Stocks vs Cryptocurrencies

HistoryOver 10% annual returns excluding the effect of inflationNo specific data is available
VolatilityLess volatileHighly Volatile
Ideal for Long-term investorsShort-term investors
RisksRisks related to companies exist, like losses faced by the companies, market factorsRisks involve crypto hacks, market risks, smart contract risks, etc. 
Ease of InvestmentIncludes some paper-workEasy as minimum KYC is required`
Differences between Stocks vs Cryptocurrencies

Stocks vs Cryptocurrencies: Which Should You Choose?

As you may have noticed by now, stocks are an ideal investment if you are targeting for long-term gains. On the other hand, cryptocurrencies are solutions for short-term gains. However, most of the expert investors believe in both kinds of securities to build a profitable investment portfolio. While including stocks in your portfolio, each type of stocks must contribute at least 3-4%. In contrast to this, you should only invest a maximum of 5% of your income in cryptocurrencies. Investors also advise beginner investors to invest only an excess amount of money that they are not afraid to lose. Depending upon your investment goals, you must choose the security you want to invest in. 


Whether you choose to invest your money in stocks or cryptocurrencies, it is very important to do a detailed analysis of the company, or crypto project that you are interested in. Make sure that you research about the team behind the project, go through their roadmap, and read their whitepapers to know about the project. Also, while allocating value to the assets, make sure you allocate the value depending upon the intrinsic value of the securities. In addition, investors must keep a close eye on the performance of their assets and keep reallocating value to them according to the profits. 

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