Crypto vs. Stocks: What’s the Difference?

Crypto vs. Stocks: What’s the Difference?
“Don’t put all your eggs in one basket.”

A solid investment portfolio ought to include a wide variety of asset classes and types. A crucial component of successful risk management is diversifying one's financial holdings across a variety of asset classes, such as real estate, stocks, commodities, bonds, and cryptocurrencies, amongst other things.

That said, let’s discuss the role of traditional and modern financial assets in your portfolio: stocks vs. crypto.

When investing in any asset, whether that’s crypto vs. stocks, investors must always strike a balance between safety and risk. The fluctuations in stock prices might be staggering, but they are not as extreme as those of cryptocurrencies. However, despite the fact that cryptocurrency offers higher returns compared to the stock market, the latter is considered to be a safer investment option.

To achieve success in crypto or stock trading/investing, one must understand the pros and cons of each financial asset, including how they “function” in your portfolio.

Crypto vs. Stocks

Trading stocks vs. crypto serves a slightly different function for your overall asset portfolio.  There are significant divergences in the processes involved in trading them, as well as in their advantages in various investment strategies. You can compare stocks vs. crypto based on the following criteria:

I. Ownership

In order to trade stocks, one should open an account with a registered brokerage. The centralized server of the brokerage company will then track all your purchased stocks so that you can maintain ownership of those stocks. The brokerage is in charge of carrying out trades, and its server is where the buyer's stock is kept.

Additionally, stock traders will be required to provide their credentials, such as their full name, date of birth, and complete address.  Opening an account in a brokerage, on the other hand, increases your protection against scams and other illegal activities.

One of the advantages of crypto trading vs. stock trading is the complete anonymity of investors. Nobody needs to be aware of who is involved in cryptocurrency trading, and this is especially true when the transaction is taking place on a decentralized exchange. A digital wallet or a hardware wallet are two options for storage that are available to owners of cryptocurrencies for their assets. It is the owner's responsibility to monitor their cryptocurrency holdings and to recall the password for their wallet.  If someone breaks into a person's cryptocurrency wallet, the owner of the wallet will have very few, if any, options for getting their money back. This is one of the problems with this strategy.

II. Exchanges

When trading crypto vs. stocks, the features and limitations of exchanges bear significant weight for investors.

Globally recognized stock exchanges are where transactions in stocks take place.  They provide buyers of stocks with safety, consistency, and transparency, and they are designed to deal with high trading volumes on a daily basis. The exchanges are subject to stringent regulations, which serve to protect purchasers as well as vendors.

The marketplaces where users can buy and sell cryptocurrencies are relatively recent developments. There are a lot of crypto exchanges nowadays, including marketplaces for NFTs (Non-Fungible Tokens). However, decentralized crypto exchanges and NFT marketplaces are extremely secure, especially decentralized ones. In many cases, decentralized platforms are difficult to hack or manipulate, which is relatively easy when it comes to centralized stock brokerages.

III. Volatility

The value of an individual company's stock is subject to erratic swings. A stock's price may move higher in response to positive news, while it may move lower in response to negative news. A continuous fall of the stock market during a bear market illustrates how dramatically stock markets can fall in a single trading session.  In most cases, there is a rationale that can be categorized as either technological or economic (such as entities that want to increase profits or whales attempting to liquidate their holdings). The value of investors' portfolios might go down, but it's unusual for them to lose everything.

The unpredictability of cryptocurrency prices is something that has become widely known. A crypto’s value is still subject to a significant amount of speculation. Bitcoin, for example, was first made available to the general public in 2009, and its ascent to popularity didn't really get going until around 2010. During that time, one bitcoin was worth approximately $0.09 USD. Since that time, its price has gone up by tens of thousands of dollars, fluctuating up or down by thousands of dollars within just a few days.

IV. Regulations

The Securities and Exchange Commission (SEC) was set up by the government to make and enforce rules that protect investors. All information that could affect a company's stock price must be disclosed by companies to shareholders. An abundance of data is available to investors and their financial advisors, allowing them to make informed decisions about investments.

Comparatively, the cryptocurrency market is still largely unregulated.  An unregulated asset presents a number of opportunities for profit to certain crypto investors. Cryptocurrency markets are not constrained by national boundaries or centralized authority in any way.  Many countries' governments are currently attempting to solve the problem of integrating cryptocurrencies into their financial systems.

V. Trading Hours

If you’re still deciding whether to enter stock trading vs. crypto trading, you have to think about the difference in their trading hours. On regulated stock exchanges, securities are more secure, stable, and transparent. Investors, on the other hand, are confined to trading only during predetermined business hours.

On the other hand, the cryptocurrency market is active 24/7 throughout the entire calendar year. At any given time, investors may either purchase or sell cryptocurrencies.  The trading of cryptocurrency is not hindered by national holidays or other significant events.

VI. Deriving Value

Comparing the crypto market vs. stock market involves knowing where they derive their value.

Investors profit when the stock's value grows, which might be linked to the company's success. The more money a corporation makes, the more its stock should grow. A stock's value might rise even if the company's performance is expected to improve in the future. Due to bad company performance or deteriorating economic conditions, a stock's value decreases. Because stocks are dependent on fiat currency, they are especially susceptible to inflation.

Cryptocurrency derives its value from the fact that it’s limited in quantity and has many utilities in the real world. Like the applications of precious metals and other commodities, a crypto’s blockchain has some applications across  financial services. Also, cryptocurrencies are not directly affected by the monetary policies of central banks, so their prices are less affected by inflation.

VII. Governance

A company's board of directors and various corporate policies can be decided by stockholder vote at the annual shareholder meeting. When a large number of investors come together, they can have a significant impact on a company's long-term strategy. However, this rarely happens.

A DAO (Decentralized Autonomous Organization) is a community-led entity with no central authority. It is fully autonomous and transparent. A cryptocurrency’s smart contract lays the foundational rules and executes the agreed-upon decisions of the DAO. The whole community can look over proposals, votes, and even the code itself. Ultimately, a DAO is governed entirely by its individual members, who collectively make critical decisions about the future of the crypto project, such as technical upgrades and treasury allocations.


It pays to diversify your investments. Success in investing requires balancing security and risks. Investors don’t have to decide between crypto vs. stocks vs. forex — they can pursue both old and new ways of investing – as long as they do enough research.