The world of virtual currency is going to be the future for all sorts of transactions. Many public and multinational companies are worried about the impeccable emergence of bitcoin, as they fear that investments in stocks might be affected by bitcoin. To some extent, this might be true. Investment in stock is a more stable investment, but virtual currency helps people to earn from their investments in a very short period of time due to its highly volatile nature. Plus platforms like “Bitcoin fortress platform” enable crypto investors to secure their investments as well.
Stocks are issued by the companies on the basis of Authorized capital, which means that shares issued by companies are backed by the worth of the company. The worth of the company is usually determined by the Assets it holds. There are different types of stocks, some stocks give ownership status to their buyers, whereas other stocks don't. Stocks value is heavily dependent upon the company’s financial performance, if a company is making a profit, the stockholders are expected to get a huge chunk of profit as a dividend. The stock price varies as per the demand and supply circle, the more the stocks of the company are sold and bought, the more the price shoots up.
Whereas, most of the top traded cryptocurrencies are the result of blockchain technology which records and secures transactions in a public ledger. The cryptocurrencies are mined through the use of powerful computers that solve mathematical problems. The most famous cryptocurrency “bitcoin” is limited in supply. Stocks are much easier to understand as compare to cryptocurrencies.
The Risk Comparison
Before taking any monetary step among any of the two financial assets, it is important to consider the element of risk. The risk is involved in almost all the Investments. Companies might go bankrupt and your investment gets wasted, although if the case goes to court and liquidation occurs, shareholders are the last stakeholders to get the portion of the money generated by the sales of the company’s assets. Secondly, the company might face loss due to the introduction of new competitors. What happened to blackberry's share price after android and IOS entered the market.
The cryptocurrency market is highly speculative, and most of the cryptocurrency prices are affected by demand and supply. The uncertainty level is much high in the crypto market as compared to the stock market. Secondly, the element of fraud and theft is common in cryptocurrencies, many crypto wallets get robbed, but things have slightly changed over time.
Stocks are legally allowed to buy all over the world, and there are stated controlled bodies that keep a check and balance on companies' financial capabilities and legalities. On the other hand, bitcoin is a decentralized virtual currency, banned in few countries of the world and there is no organization or state that regulates the cryptocurrency.
Which one is more profitable? Cryptocurrency or stocks
After considering the risk level, profitability is the second most important aspect to consider before choosing among crypto or stocks. There is no doubt that cryptocurrency is more profitable as compared to stocks, as the crypto market's high volatility is something that makes it attractive. Whereas stocks price is less likely to rise rapidly.
As risk level is high in cryptocurrency, the potential to earn a high profit is also there, stocks are less riskier, hence profits are also less attractive.