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Crypto vs Stock: Battle for Investors

Aarushi Ghai

This piece is cross-published in collaboration with our partner, the Oxford Business Review. Head over to their website to check our more of their work!

With time, technology has become so advanced that it has not only created an alternative world for all of us in the form of social media but also an alternative for the business world. Back in 2008 when the markets almost all around the globe were facing the impact of the financial crisis emerging in the US, this event marked the launch of crypto-currency in the real world.

The crisis gave birth to this revolutionary technology known as block chain that acted as the backbone of one of the world’s leading crypto-currencies, Bitcoin, as Julian Whitaker’s article pointed out earlier this week. It is interesting to note that even before the launch of Bitcoin, the concept of digital money or E-cash came into existence but it did not gain much attention back in the 1900s. If people in 1900s would have started believing in the possibilities of the new form of currency, maybe the world would have had its currency revolution much earlier.

When Bitcoin was first created it faced a lot of criticism, especially from the financial sector with its traditional approach of investing money in the stock market. However, now the scenario is different. Investors have not started wholly trusting the market, and are also in a dilemma as to where to invest for better returns. One of the major reasons to trust the crypto currency was the technology it used i.e., block chain. It is a form of technology that ensures a safe and completely transparent system of investment and trading, eliminating the chances of scam and misrepresentation during the transactions.

In fact, the decentralized nature ensures elimination of middlemen and no government control as well. Another reason why the investors were attracted towards crypto-currency, especially Bitcoin, was due to the fact that it is limited: there are only 21 million Bitcoins that could be mined. This feature puts Bitcoin at a similar level to that of gold i.e., limited, hard to mine, and therefore of more value. It is also believed that Bitcoin would reach its maximum value by 2040. The creation of Bitcoin was followed by many other crypto currencies forming a complete market and giving the investors a vast variety to invest and yield returns.

To address the main question of which is a better market to invest, it can be said that both have their pros and cons. Stock market has been a traditional source of investment, and the trends can be predicted with the help of statistics and research, whereas on the other hand the only factor influencing crypto currency market are the ultimate forces of demand and supply, making the market highly volatile. From facts it can be seen that from being traded for a penny, now Bitcoin holds almost half of the market, this alone indicates the potential growth of this crypto-currency. Although we cannot deny that the currency has faced certain downs in recent times, it has always managed to bounce back up relatively quicker than some of the stock prices. A common factor between both the markets remains the risk they carry. However, it is necessary to note that crypto investments should be considered for the long term due to the volatile nature of the market.

Crypto-currency was created as an alternate paper currency and there are chances that the world might eventually shift towards adopting crypto-currencies as the official payment mechanism. From criticizing Bitcoins to El Salvador announcing legal tender for Bitcoins, it can be said that the change has already started. Not to forget, both the markets offer one common factor, i.e. increase in wealth, so as long as the money invested is yielding returns, one may opt for either, or even both.


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