Did you hear about the cryptocurrency crash in 2018? Bitcoin lost nearly a third of its value, and crypto was also a sell-off. Despite the fallback, many people claim that cryptocurrencies are here to stay. As long as you find the right ones today, you could be enjoying unrivaled returns tomorrow.
Now that it is established that the crypto crash was merely a temporary setback, current investors are torn between investing in stocks or cryptocurrencies. Even though this debate is still ongoing, some facts can help you decide on the ideal investment for you.
Cryptocurrency Pros and Cons
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Cryptocurrency trading involves speculating on the price movements of cryptocurrencies. This is not so different from gambling, and that is why there is a potential of creating huge returns. The high volatility comes with both significant risks and great benefits. Apart from the prospects of making big bucks overnight, cryptocurrencies have increased liquidity and are easier to sell. Investors also get clear directions and can accurately evaluate different products before investing in them.
The main downside of cryptocurrency trading is the high volatility caused by market manipulation. The cryptocurrency markets are more volatile than even the stock markets. Another con is that there are network stalls from time to time, and you may also face a shortage of resources. Most cryptocurrencies, however, do pre-ICO raising to protect investors.
Stocks Pros and Cons
Trading in stocks or equities allows you to buy shares of ownership in a prospective company. Once you are a shareholder in a company, you can enjoy the profits that are generated and also see an appreciation in the value of your share if the company becomes successful. Trading in the right stocks could see you earn high returns, not to mention that you will also be receiving dividends. You can invest in different stocks within different sectors, or industries to diversify your risk and enjoy various growth opportunities. It is also worth mentioning that stocks, just like cryptocurrencies, are easy to buy or sell.
Stocks are also volatile. There is always a possibility of stock prices rising or falling sharply because of all kinds of issues, including bad or good news. Investors must do keen research before investing in any company because picking the wrong stock puts you at risk of losing your investment.
Difference between Stocks and Cryptocurrency
Stocks earn you a portion of a specific company. Cryptocurrency trading, on the other hand, involves investing in the currency or technology of a company, although you will not own any part of it. This makes the cryptocurrency market work ten times faster than the stock markets. However, the prices change at higher magnitudes when going up or down. For new investors, it is safer to consider stock trading.
Whether to invest in stocks or cryptocurrency is a very personal decision. Both options are great as long as you find the right avenue. If you have lower risk tolerance levels, consider investing in stocks. Cryptocurrency can, on the other hand, make you a fortune overnight, although the markets are unregulated and prone to manipulation.