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Today, let’s talk about the big differences between crypto and stock investing. But before we dive into that, please take a moment to understand that this is not investment advice, we are only explaining the concepts behind crypto. Always do your own research!
So, you’ve been asking yourself what the differences are between crypto and stock trading. Both go up and down, people make money or lose money.
So, let’s talk about three main differences: Accessibility, backing, and volatility.
Accessibility is an obvious one: Creating a Robinhood account is very easy, and the app gives you access to thousands of stocks and options right away. With crypto, things are still much harder - oftentimes you have to go through multiple steps to buy the lesser known coins.
Backing, so what’s behind your investment, is also important. When you buy Apple stock for example, you own part of the company with all of its assets: Those include buildings, real money, inventory, patents, and more. And Apple produces real goods that generate revenue. Crypto on the other hand is mostly a bet on the future - blockchains that people speculate will take over the world. In most cases, there are no hard assets behind them and things could fall apart entirely in a black swan event.
Lastly, consider volatility. That term refers to the amount of swings the price goes through. Established, big companies that are exchange traded have a much LESS volatile price than crypto. In contrast, it’s common to lose a lot of money in a crypto trading day, and then gain it back the next. But things are never guaranteed, and the higher the volatility, the higher the risk of getting burned.
We hope those are some good insights to consider when comparing stocks to crypto. And next time, we’ll talk about what Layer 2 is.
Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.
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