Clarity on Stocks Versus Cryptocurrencies

Fredrick Awino

You have probably heard the term stock market used so often. Actually, serious investors do not necessarily have the full ownership of assets or companies but instead own a stake in some of the blue chip companies. Actually, investing in stock is touted as one way that young investors can use to grow their wealth. Now, cryptocurrency has also come into play as an investment option over and above being a currency. So, comes the confusion on whether cryptocurrency is a stock, stock being a crypto or which way?

WARNING: Investing in crypto, or other markets, can be of a high risk for your savings. Do not invest money you cannot afford to lose, because there is a risk for losing all of your money when investing in crypto, stocks, CFDs or other investments options. For example 77% of retail CFD accounts lose money.

In order to get over the confusing shenanigans about comparison and contrast between cryptocurrency and stocks, it would be necessary to learn them side by side. Just to mention, stock is a stake; a simple form being shares in a company. Cryptocurrency is a digital asset and a means of payment. But, lets zoom into it.

Clearing the confusion between Cryptocurrency and stocks

Wondering whether to invest in stocks or cryptocurrencies? First, you need to understand the differences that exist between them before making a step. Also, remember as an investor it is good to diversify your investments. Spreading risk means investing in different things including spreading risk, real estate, bonds, as well as stocks.

Cryptocurrency is a medium of exchange. Over the years, it has highly gained popularity. Unfortunately, it is not regulated. This makes it a risky financial system. The main reason is that it does not have government backing. Moreover, the market determines its value.

On the other hand, shares mean that you own a portion of a company. As an investor in the stock market, you will benefit if the value of what you have invested in increases. Basically, the more profits and sales made by a company, the more its shares increases. Even though both crypto and shares are good investment options, they serve different purposes.

Stocks Vs Cryptocurrencies

The first stock was introduced around 1611 in Amsterdam. On the other hand, the first cryptocurrency which is Bitcoin came about in 2009. For stock, there has been enough time to put everything in place. Also, since the invention, systems have been built in ensuring that the market is well functioning.

Cryptocurrencies have just been in existence for about 13 years. Although cryptos are secure, they may face system hacking. For instance, recently, hackers made away with $320 million in assets. They made away with 120,000 wETH. Moreover, on 13th June 2011, about 25, 000 BTC were stolen. During that time, their worth was $400, 000.

In comparing 5-year annualized returns, the stocks amount to about 15.7% while cryptos 94.4%. Moreover, in comparing the market cap, stocks have $40 trillion while cryptos have $1.9 trillion. For weekly volatility, in stocks, it is 2.0% while in cryptos it is 12.3%. in comparing single-week loss from 2013 to 2022 stocks amount to -14.98% while cryptos -39.50%.

The taxation of the two systems is the same. You are taxed after making a profit by selling stocks or cryptocurrency. They are also the same in the way they are transacted. They use a form of frictionless platform. Also, the two are prone to scams.

Hours of operation

Circumstances are different. However, cryptocurrencies run 24/7 all year round. Even during midnight, you can trade in cryptocurrency. The prices change every time. On the other hand, the stock market works full time. Basically, it works during the business days and takes designated holidays, weekends, and nights off.

The Way they are Governed

A federal agency such as US Securities and Exchanges Commission has authority in the stock market. They do this by protecting fair trade. In crypto, there is no central authority that regulates it. Moreover, in crypto, governance is distributed between the people involved in maintaining and growing the technology.

In terms of regulation, cryptos are investigated by the Securities and Exchange Commission (SEC). In stock, SEC oversees its exchanges and even the electronic securities exchange. Cryptos are also regulated under money transmitter laws.


Stocks and crypto can increase or reduce in value. It means that purchasing both entails risk. Crypto has mainly gained a reputation because of the drastic changes in value. This takes place even when there is no warning. Consequently, stocks are associated with companies. The firms must regularly and publicly share what they are doing as well as what they will do in the future.


As I said earlier, stock existed since 1611 and the stock exchanges have existed for a long time. They are famously in New York City. On the other hand, the cryptocurrencies exchange are new. Binance is regarded as the largest. In May 2021, the daily trading volume is $50 billion.

Trading Costs

Each time an investor sells or purchases stocks, they must pay transaction fees. They eat into their returns. Also, the investors purchasing low-fee should pay fees to a manager purchasing and selling stocks. However, if one is trading through a broker, then the costs will be high.

Trading in cryptos comes with substantial costs. The reason is that they charge fees. Apart from that, there are gas fees. It is the costs that are extracted with the network in verifying the validity of an exchange. However, it is important to remember that the fees vary from one crypto to another.

The Advantages of Investing in Stocks

Over the years, stocks have been good payment options. As I indicated up there, it is a form of security that shows you own a corporation or own parts of its earnings and assets. When you purchase stock, you become a stockholder. The publicly traded firms list their stocks on the stock exchange including the Australian Stock Exchange and New York Stock Exchange.

The first benefit of investing in stocks is dividends. The stock has a way of providing potential income in form of dividends. Dividends are the profits of a company and they are given to the shareholders. However, you must remember that not all firms offer dividends. However, for the ones that offer, it is a good way of making passive income.

Stock is a proven long-term form of investing. Over the years, they have performed well as compared to other assets including gold and bonds. In addition, it is true as dividends can be reinvested in form of stock.

Investing in stock has growth potential. When a company you invested in is doing well, then the stock price will go up. It means that as an investor, you can make money through capital gains on shares as well as dividends. Also, it offers financial security as well as peace of mind. When comparing it to cryptos, it is good because the prices do not change at a high rate. Furthermore, they do not change abruptly. It is something that you may have prepared for in the past considering the performance of a company in the stock exchange market.

Moreover, apart from stock being highly regulated, it is less volatile. The fact that it is regulated makes it a secure investment. Before you are listed on the stock exchange, you should meet some requirements.

The disadvantages of Investing in Stocks

The first disadvantage is that it has high fees linked to the management and trading of a portfolio. The fees reduce one’s return on investment. Also, there are no high chances of making extreme gains in stock in a short period. It is just a good form of long-term investment.

As an investor, you can only purchase stock at certain times. This is a disadvantage because, during that time, you may not have enough money to make a purchase. Remember for cryptos, you can purchase them at any time as they work 24/7.

In stocks, tax applies to both dividends and capital gains. It makes it difficult for a person with varied stocks. Lastly, it is still a volatile market. It is subjected to fluctuations in global events and news.

The Advantages of investing in cryptocurrencies

The first advantage is the fact that it is decentralized. It is not subjected to any financial or government institution control. Also, this means that it is not affected by inflationary pressures like gold or fiat currency.

Furthermore, cryptos are highly accessible. You can purchase them anywhere at any time. All you need is a crypto wallet and internet connection. You may only need expensive devices when mining. Therefore, as compared to stock, it is readily available.

In cryptocurrencies, you can get large gains within a short period. An example of one of the cryptos is Bitcoin. In 2009, one was worth 10 cents. However, in 2021, one cost about $68,000. This shows how its value has highly increased within 12 years.

Cryptocurrencies are good as you can choose from different coins. As much as Bitcoin is the dominating crypto, there are several altcoins. They include Dagecoin, Ethereum, USD Coin, Cardano, Tether, Steller, and XRP.

The Disadvantages of Investing in Cryptocurrencies

As compared to stocks, cryptos are highly volatile. The prices change within a short period of time. For instance, since late 2021, the prices of cryptos have highly reduced. The prices have reduced across all the cryptos including Ethereum and Bitcoin.

The taxation of cryptos is complex. You can be taxed a huge amount of money even without knowing. The reason is that the tax authority is not informed of your tax obligations.

Regulatory risk is another disadvantage of cryptocurrency. Most companies do not accept it as a form of payment. It is just currently that some firms in the hotel industry are commencing it as a form of payment. This makes it difficult for an investor. The fact that it is not regulated may have a negative influence on its future value.

Author Fredrick Awino