Why stocks are better than cryptocurrency

Why stocks are better than cryptocurrency

Before we go any further, I must clarify one important matter. I have not said “do not hold cryptocurrency”. I am all for putting some money into the block chain, while at the same time being aware of the reasons that cryptocurrency should not be treated as you would treat other true investments. Let’s get into some points to consider.

Stocks are backed by an asset – the company.

When you purchase stocks you are purchasing fractional shares of an actual company. Therefore you have an ownership interest in that company, its assets and cashflow.

The company gives value and stability

With cryptocurrency the only thing giving a particular cryptocurrency value is that other people perceive it to have value. There is little to nothing actually holding up the value of a cryptocurrency but the supply vs demand.

Stocks are regulated

There are many rules and regulations for stocks. One such example is price manipulation. A single tweet or blog post can send a cryptocurrency soaring or crashing. Yet this same behavior in regards to a stock would be criminal activity.

The stock market has a long history

A long history and proven track record. Many (but not all) problems have been encountered and solved along the way (hence the regulation). We have decades of past performance to base our investment decisions on.

Shady currencies

Many – likely as much as one third – of cryptocurrencies are thought to be fraudulent in some way.

In conclusion, I do still believe that the block chain is here to stay. This is clear. Holding cryotocurrencies is actually a good choice. But do so with consideration of the differences between stocks and cryotocurrencies. With these distinctions in mind one can allocate an appropriate amount of ones investment capital to crypcurrencies. In my opinion no one should be holding crypto as their primary investment given the nature of stocks vs cryptocurrency at the present time.

All of this may change in the coming years, as some cryptocurrencies are developing new features and technologies. But at the present time, keep in mind the differences.

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