We are all aware of how digital assets have seen a boom in both value and general acceptance over the past few years. It is visible in each new record growth of crypto such as Bitcoin, being accompanied by the growth of all the other coins, and the emergence of new projects and solutions based on the technology crypto work on (the blockchain).
Although their history is rather short, compared to traditional investments, if we look through it, cryptocurrencies are a great investment. If you had invested $1,000 ten years ago, today you would have several hundred million dollars in your account.
The growth experienced by all coins could not remain unnoticed for long. Many investors have realized the potential of the technology and have seen high percentages of return on their initial investment. But these currencies as an investment should not be viewed exclusively through the prism of high profits, especially if you are a beginner who is just learning about this field.
Here we come to the point of thinking about which investments are smarter – traditional or crypto? To decide, one has to consider all their characteristic and advantages. Let’s start with crypto.
Investing in digital assets has never been easier
A few years ago, investing was an abstract concept for most people. Investing in mining stocks, real estate, or other forms of the property was predominantly thought to be complicated and reserved for people with more capital.
Let’s go back briefly to the beginnings of crypto The process of buying was complex enough to put people off in the first steps. Not to mention how computers were slower and how difficult it was to navigate through the whole procedure of buying and selling.
Today, with a few clicks, with the help of apps like quantum-code.app, you can buy cryptocurrency on your smartphone.
Digital assets such as cryptocurrencies are an attractive form of value preservation in the event of inflation or crises such as those the world has faced a couple of times in the last two decades. Unlike traditional fiat currencies, they have a limited number that can be in circulation. No one can influence that the once-defined number in circulation will ever increase. The such ability makes crypto resistant to inflation, as opposed to traditional currencies.
Also, the greatest advantage they have over fiat currencies is the fact that they are not owned by banks and governments. Once you have bought a certain amount, and stored it in your digital wallet, you are the only one who can use them, and no third party can take them away from you.
The reason behind people investing so much is the search of profit. Money makes the world go round, and that’s why everyone is trying to find a way to make a profit, be it through traditional investments or investing in digital assets like crypto.
What attracts investors the most is the high returns. Many cryptos can see a 20-40% jump in just one day, which is a return one can only dream of. However, the reason for the big jump is the high volatility. Just as the value can go up in a day, it can also go down.
What this type of asset allows you do is to engage in trading at any time and for an amount that suits you. Best of all, investments like these are not only reserved for wealthy individuals, but for whoever would like to try their luck.
As already stated, investing in cryptocurrencies requires a lot of learning and patience. Otherwise, you indulge in blind investing, which can lead to financial losses.
Traditional investments and their advantages
Investments in the capital markets have historically grown with the growth of the global economy. The logic here is simple when the economy grows, so do the company’s earnings. This happens because economic growth creates jobs, jobs increase sales, and sales increase income. As the economic situation is better, workers’ wages are also higher, and the consequence of this is increased consumption. All this creates a circle that increases investment in the capital markets in moments of a growing economy.
Capital markets have traditionally served as a very good platform for the exchange of money between investors, and those who need capital. Securities such as bonds pay investors interest rates that are generally higher than bank interest rates, while stocks provide investors with dividend income. These securities also have great liquidity, that is, the possibility of exchange for money when necessary.
Due to the fact that the rapidly growing cryptocurrency market is also increasingly liquid, we cannot state this as a competitive advantage between these markets, but the liquidity of securities has been considered for many years as a great benefit of investing in traditional capital markets.
Also, securities on the capital market can be used as collateral to obtain loans from banks and financial institutions, and holding several different securities can ensure long-term advantages and financial gains. If the expectations from investments in the capital market are too high and unrealistic due to the great instability of these markets and their susceptibility to large upswings, investments in this type of market should be reduced. Also, every purchase and sale of securities can and usually includes some kind of fee or commission, which automatically increases transaction costs.
The conclusion is that if you prefer regular, constant, and safe income and do not like big price fluctuations and risky and stressful situations, it is recommended to avoid investing in the capital markets, but also the cryptocurrency market. In other words – investments in both of these carry a large dose of risk, but also opportunity. Therefore, before deciding to make a move and become an investor in any of the mentioned, one should learn a thing or two about investing safely, and only if everything we’ve mentioned in this article is digested with awareness, one can remain cold-headed and steer its investments properly.
Nina Smith