Crypto vs stocks

Cryptocurrency and stocks are two of the most popular financial assets to invest in. This guide analyses their key differences to help you choose between them.
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Updated: Jan 28, 2022
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On this page, we provide a comprehensive comparison of cryptocurrency and stocks. Find out all about the different pros and cons, and discover which one suits your investing style and the current economic conditions better. 

What are cryptocurrencies?

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A cryptocurrency is a digital currency. Cryptocurrencies utilise blockchain technology to ensure there is no need for any central body to manage transactions. So, unlike fiat currencies (like GBP or USD) – which use banks and other regulatory bodies to govern transactions – cryptocurrencies operate democratically through something called a consensus mechanism. 

The two largest and most popular cryptocurrency projects to invest in and use for purchases are Bitcoin and Ethereum, though there are many others too. 

What are stocks?

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Stocks represent a portion of ownership in a publicly traded company. Anyone can buy or sell stocks, from regular retail investors to major financial institutions. 

When a company is seeking to raise capital, often to spark a new phase of growth, it may choose to go public on a stock exchange, usually via an initial public offering (IPO). Investors can then purchase the number of shares they want for the going market price and speculate on their value. Some stocks even pay dividends to shareholders. 

The difference between crypto and stocks

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The key difference is that stocks are something to invest in that provide ownership in a company, whereas investing in cryptocurrencies don’t provide this type of ownership. However, unlike stocks, cryptocurrencies can be used for things like purchases and specific functions on their respective platform.

In addition, cryptocurrencies can be used in a variety of ways on their respective platforms, such as to make purchases or to earn extra money in the form of staking, whereas stocks can only really be bought and sold for fiat money like GBP, USD and EUR. 

Moreover, a cryptocurrency may provide some governance rights for token holders on its native platform, but it does not represent ownership of said platform in quite the same way a stock does for a company.

Cryptocurrency vs stocks

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Cryptocurrency and stocks have some distinctive differences that you need to consider when choosing between the two. Below, we have outlined some of the key metrics to factor in when deciding which of the two to invest in. 

Safety

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Stocks are safer than cryptocurrencies, though some of the top coins like Bitcoin and Ethereum are quite trustworthy. However, there are far more safe stocks than crypto coins.

The world’s first stock exchange, the Amsterdam Stock Exchange (AEX), originated in 1602, whereas the first cryptocurrency Bitcoin, was founded in 2009. Even though there has been increased scrutiny on cryptocurrency from regulators and financial authorities in recent years, this has not been enough to offset a 400-year head start in terms of investor protection. 

When investing in a stock with a regulated broker, you can rest easy in the knowledge that your funds and holdings are secure. By contrast, and almost by virtue of their digital nature, cryptocurrencies have found themselves more susceptible to threats like hacking attacks, pump and dumps, and rug pulls.

These days, purchasing a major cryptocurrency from a reputable broker or exchange is practically as safe as buying a stock, but sourcing more obscure crypto coins remains a riskier and less transparent endeavour thanks to online anonymity and encryption.  

Performance

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Cryptocurrencies have the potential to provide more extreme performance than stocks, though the average stock will tend to provide more consistent returns than the average cryptocurrency. 

Let’s take a look at one of the most popular stocks, Amazon. It started trading for $18 in 1997 and has since reached prices of over £3,700 in recent years. However, Bitcoin started trading in July 2010 for around $0.0008 to $0.08 per coin and has since reached prices of around $65,000. 1 share of Amazon would have made you more than 200 times your original investment, but 1 Bitcoin would have made you more than 80 million times your original purchase.

While this is an extreme example, it is clear that in terms of raw price performance, cryptocurrencies hold an edge. However, it is worth remembering that the average stock is likely to outperform the average altcoin.

Volatility 

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Both cryptocurrency and stocks experience a degree of volatility, though, in the case of crypto, it is much more severe. This is largely reflective of the level of risk involved in the investment and is caused by the speculative nature of the cryptocurrency space.

To list a company on a stock exchange requires a great deal of documentation and you must clear several hurdles. By contrast, listing a cryptocurrency is much simpler and can be done anonymously without the same transparency, and this is what causes some of the volatility. In addition, a significant amount of leverage is used in the crypto market, which causes more dramatic price swings to occur. 

While stocks will mirror choppy economic conditions and plunge in the event of a crash or emergence of negative investor sentiment, their value is more tried and tested and so they are viewed as more sustainable and reliable. So, while cryptos may offer the biggest gains outright, they come with a quantity of risk and a lack of consistency that stocks don’t have. 

Accessibility 

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While stocks are easier to buy on the public markets, cryptocurrencies have also become increasingly easy to obtain in recent years. This is because some of the world’s major cryptocurrencies are now available from online brokers: the easiest platforms to access for most investors. 

You can also purchase cryptocurrencies from an exchange, though finding more obscure cryptocurrencies remains a real challenge that requires a degree of technical knowledge and persistence when searching for a platform that supports the coin in question. 

Moreover, the legality of stocks has been long established, and it is generally easy to find out where you stand in your jurisdiction. However, it can be hard to know the cryptocurrency laws in your region since they have not been fully established yet due to the immaturity of the market. 

It’s important to note that while stocks are relatively easy to get your head around, the world of cryptocurrency is new, innovative and can seem complex, making it less accessible for casual investors and those without significant digital know-how.

Flexibility

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Cryptocurrencies have an edge over stocks in this department. You can simply invest in them to speculate on their future value, but you can also earn money from them in many other ways. This includes staking, playing blockchain-based online games, trading NFTs, building metaverses, and even creating synthetic tokens that represent real-world assets. Moreover, you can spend your crypto, trade it for other coins, and add it to a wallet for enhanced security. 

With a stock, all you can really do is speculate on its value, though within this speculation, you have some scope for personalisation, including CFDs, futures contracts, shorting and leverage, and you can also earn dividends. 

Variety 

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The stock market is significantly larger than the cryptocurrency market, meaning there are more companies to choose from than coins. In addition, there can be stocks for absolutely any kind of company, from a children’s toy manufacturer to a uranium mining company, meaning your options are vast. 

By contrast, cryptocurrencies are generally limited in their variety. While there are plenty of smart and innovative projects, there is not the same degree of variety as found with stocks, and most exist within the decentralised finance (DeFi) realm. 

Which is a better investment?

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This really depends on what kind of investor you are. If you are looking for larger gains and are willing to accept more risk, investing in or trading cryptocurrencies might be your best bet. The volatility of the market can provide major opportunities, and crypto has the added flexibility of offering monetisation in the form of staking, blockchain-based games, synthetic tokens, NFTs, and more.

However, if you want to reduce your risk profile and go for a more conventional investment, stocks have plenty of perks too. For instance, they are ideal to build wealth in the long term, especially if you are planning on saving for retirement. Moreover, if you use an ISA, there are tax breaks available. 

In addition, you can invest in stocks in a variety of ways, from ETFs to futures contracts. Moreover, the level of strict regulation can give you peace of mind that your investment is secure, and the level of price accretion and dividends on offer remains impressive. 

Compare the best places to invest

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The best way to invest in both stocks and cryptocurrencies is through an online broker. The platforms below offer the best experience for beginners and you can get started in just a few minutes by clicking one of the links in the table.

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1
Min. Deposit
$ 100
Best offer
User Score
10
CFDs on BTC, ETH, LTC, NEO, XRP, IOTA, EOS, BAB, ADA, TRX, XMR
No need to open a crypto exchange account or use a special wallet
Regulated Broker - FCA, ASIC, CySEC (license number 250/14)
Start Trading
Payment Methods:
American Express, Apple Pay, Bank Transfer, Credit Card, Debit Card, Discover, Google Pay, Mastercard, PayPal, SEPA, Trustly, Visa, , skrill
Full Regulations:
ASIC, FCA, FSA, MAS, cysec-250-14-regulator, isa-regulator

CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

2
Min. Deposit
$ 10
Best offer
User Score
9.9
Up to $240 bonus!
Build a diversified portfolio with crypto, stocks, and ETFs — all in one place.
Trade on the world's leading social trading and investing platform
Start Trading
Payment Methods:
Bank Transfer, Credit Card, Debit Card, PayPal, Wire Transfer
Full Regulations:
CySEC, FCA

Cryptocurrency is offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Invezz.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB.

3
Min. Deposit
$ 0
Best offer
User Score
9.6
Get insights from millions of investors, creators, and analysts
Build your portfolio of stocks, ETFs, and crypto–all in one place
No minimum deposit
Start Trading
Payment Methods:
Bank Wire, Check, Debit Card, Wire Transfer
Full Regulations:
Cryptocurrency execution and custody services are provided by Apex Crypto LLC (NMLS ID 1828849) through a software licensing agreement between Apex Crypto LLC and Public Crypto LLC. Crypto trading on Public platforms is served by Public Crypto LLC and offered through APEX Crypto. Please ensure that you fully understand the risks involved before trading.

A quick recap of what we’ve learned

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So, in summary, cryptocurrencies offer a higher growth ceiling than stocks, though stocks are more consistent performers with less volatility. Moreover, stocks are a safer investment.

While both stocks and crypto are rather accessible these days, stocks have a slight edge in this department because they are simpler to understand and acquire. However, in terms of flexibility, you can use cryptocurrencies for far more functions than stocks, allowing you to earn money in a variety of ways, from staking and playing blockchain-based games, to creating synthetic tokens and trading NFTs.

Finally, comes the question of variety. In this field, there are simply far more stocks available than coins, and the business models of these companies are more diverse than those found in the crypto industry. Both crypto and stocks can be good investments in the right hands, and now you know the pros and cons of each, you can make an informed decision.

Where can I learn more?

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To learn more about crypto and stocks, check out any of our courses below. They will help bolster your knowledge so that when you decide to invest, you make intelligent decisions.



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Charlie Hancox
Financial Writer
Charlie is a Financial Writer for Invezz. He covers commodities, cryptocurrencies, and breaking news. Prior to joining Invezz he helped grow Crux Investor into the fastest-growing... read more.