With the cryptocurrency market becoming increasingly known, many people think of investing in digital assets, but put aside a series of skeptics and opt for traditional actions. But what is the difference between bitcoin and stocks?
Bitcoin (BTC), the world’s largest cryptocurrency, is a digital asset, that is, it is electronic money that operates within a digital network. Bitcoin transactions are cryptographically secure. Despite this, bitcoin, like other cryptocurrencies, has high volatility and is therefore considered a high-risk investment.
Stocks are securities that represent part of a company’s capital being traded on a stock exchange. On receiving the shares, the holder becomes a partner in the company.
Both are equity investments. But each with its own nuances.
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Volatility is an important aspect that differentiates cryptocurrencies from equities. As stated earlier, bitcoin has strong volatility as it is a decentralized currency. That is, no financial institution interferes in the transaction.
Bitcoin has already reached its all-time high of $69,000. Currently, its value is in the region of $20,000. Significantly, BTC is the largest cryptocurrency in the world.
On the other hand, the volatility of stocks is slightly lower and is directly affected by global economic factors. In these cases, the movements are mediated by the stock exchanges.
Another difference, less relevant, is opening hours. Stock exchanges are open during business hours, while the crypto world is full-time, every day of the week.
Because they are different markets, there are many different rules.
What to invest in?
For any investment, you need to know the objectives, risks and time frame. It is most commonly recommended by analysts to diversify a portfolio so that investors can get more protection and not rely on just one type of asset. In this sense, both stocks and cryptocurrencies can be good choices based on established criteria.
Both markets require dedication and understanding of how they work. And both are influenced by the global economy. Therefore, it is necessary to focus on what happens in the economic scenario.
Bitcoin, as a cryptocurrency, is considered a high-risk investment due to its volatility. But, it can bring good results for the investors. Stocks, if they are from larger and more stable companies, can be safe and yield good returns.