Which Is a Better Investment, Stocks or Crypto?
Cryptocurrencies have been increasingly gaining popularity with the average investor, who up until recently has tended to entrust their capital to more traditional investment channels, one of the most common being stocks.
While both stocks and crypto are on the more liquid and speculative end of the spectrum there are significant differences between the two. Investors need to understand these differences so that they can use the best strategic approach for each asset type.
Stocks are representations of part ownership in a public company and individual units of stock are called shares. The shares you purchase reflect your percentage of the company, and being a shareholder can give you voting power that allows you to impact its future direction.
You can earn capital gains by buying low and selling high to make a profit from the rising value of your stock shares. Revenue can also be earned from dividends, a percentage of company profits paid to investors, monthly, quarterly, semi-anniually or annually. They can be reinvested in the purchase of additional shares or simply provide an additional source of income. However, dividends are not offered by every company, and this should be checked in advance of purchase.
Investing in Cryptocurrencies
Unlike a pound coin or a dollar bill, cryptocurrencies are completely virtual, digital assets, with no physical form, and each unit of crypto is called a token. Digital currencies exist solely in the electronic sphere, as recorded entries on a blockchain ledger and there are thousands of different types on the market.
Some are pure currencies, like Bitcoin, others are utility tokens, such as Ethereum that power a digital ecosystem providing a product or service. There are also stablecoins, like Tether, with market value pegged to another currency like the US dollar, NFT’s, which are unique digital artworks and many others, which can be bought, sold, and traded.
Crypto vs Stock
When it comes to comparing crypto vs stock there are a number of critical factors to consider, from security and regulation to the volatility of each market.
Let’s examine some of these aspects of each type of investing in greater detail:
Without a doubt, cryptocurrency is the world’s most volatile asset class, with the market as a whole and individual digital assets fluctuating dramatically in price. While this translates to incredible revenue potential, it also means exceptionally high risks, since the price of an asset can sink as quickly as it soars, in no time at all.
In contrast, stocks are far less volatile than cryptocurrencies. While they are far from risk-free they do present a more stable investment opportunity, with a degree of predictability, particularly if you invest in an index fund like the S&P500, as opposed to an individual stock.
So, when it comes to crypto vs. stock with regard to volatility your choice is between greater profit potential and a steadier, if not completely safe investment.
Securities like stocks are strictly regulated, with stock exchanges and the companies they list monitored closely by regulatory bodies like the Securities Exchange Commission (SEC), which enforces laws in the US against market manipulation.
However, the crypto markets are frequently referred to as the “Wild West” since they are severely under-regulated. Questions of taxation and regulation are still in the process of being answered as governments around the world scramble to legislate and catch up with developments relating to this rapidly evolving asset class. While this allows for the rapid creation of new and exciting digital assets, there is a downside – fraud.
In the crypto vs stock debate, one of the biggest red flags for investors is the danger of scams, particularly in light of the anonymity guaranteed by blockchain based technologies. Fraudulent cryptocurrencies account for up to a third of all new tokens, from pump-and-dump schemes to rug-pulls, and since regulatory oversight is minimal, protections are insufficiently enforced. So, while a single well-timed tweet can turn the tide for the price of a cryptocurrency, this could not occur with regulated assets like stocks.
The stock exchange system includes major centralized national stock exchanges like the American NASDAQ, German DEX, English FTSE, Hong Kong HANG SENG, Japanese NIKKEI, French CAC, and many others, and stocks can only be listed on one exchange at a time.
In contrast, cryptocurrencies are offered on a decentralized exchange network and can be traded by individual crypto owners among themselves, across exchanges. So, unlike with shares, which necessitate trading using a clearing house, with crypto, the investor is in complete control and can trade directly with other buyers and sellers with no third party required.
On the plus side, there is no middleman, but on the other hand, there is no centralized pricing mechanism for cryptocurrencies to provide clear market values for each token. This is not a big deal for heavy hitters with high trading volume like Bitcoin and Ethereum, but it can result in altcoins being less liquid, and less predictable than stocks.
The Best of Both Investment Opportunities
Here at ArbiSmart, we offer both the regulatory security and profit predictability of traditional investment opportunities as well as the exceptionally high yields of crypto assets. Also, the platform offers additionalpassive profit channels on top of generous capital gains from the rising value of the native token, RBIS.
RBIS has already gone up in value by over 860% in just two years, providing exceptional capital gains, far higher than the average 10% a year for stocks. This amount is set to soar, once RBIS is listed on global crypto exchanges at the end of December, 2021, and new RBIS utilities are introduced in Q1, 2022, which should drive up the price even higher.
ArbiSmart performs automated crypto arbitrage, a low- risk investment strategy that provides a hedge against crypto market volatility. It works by exploiting brief windows in which a token is available at different prices at the same time, across a number of exchanges. These temporary disparities occur consistently, with the same regularity in both bear and bull markets. So, even if the market were to suddenly collapse, your crypto would maintain its value and you would keep earning a steady profit.
As a platform user, you just register, deposit funds in either fiat or crypto and then the automated system takes it from there, converting your funds into RBIS, and using them to perform crypto arbitrage. Connected to 35 exchanges, where it monitors hundreds of coins around the clock ArbiSmart’s algorithm identifies price differences. It then buys the coin on the exchange with the lowest price, then sells it on the exchange where the price is highest for profits that start at 10.8% and reach up to 45% depending on the amount deposited.
You can also make as much as 1% a day in additional passive profits for storing your capital in a locked savings account for a contracted period.
The benefits of crypto arbitrage are clear but one of the best tips on investing in crypto that you will ever receive is to diversify. Use a range of strategies to invest in a variety of tokens. Also, in terms of crypto vs stock, you don’t need to choose one over the other. You can take advantage of risk management and growth opportunities simultaneously, by expanding your portfolio with wide array of both traditional and digital assets.
To learn more about various aspects of crypto investing, from the different types of assets to the latest trading strategies, check out the ArbiSmart blog.