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Stocks vs Crypto: Which is Right For You?


Who can ignore the cryptocurrency buzz? Many people are more than just aware of the existence of crypto — they’re actively taking advantage of it. An NBC News poll found that one in five Americans has invested in, traded crypto or used cryptocurrency. On the other hand, Gallup’s April Economy and Personal Finance Survey found that 58% of Americans reported that they own stock.

Should you stick with stocks? Or is a hybrid approach the better option? The short answer is that it depends on your goals and other factors.

Let’s walk through the definition of both crypto and stocks, the differences between crypto vs stocks, the pros and cons of each and what the future of crypto may look like. By the time you’re done reading, you may have a better idea of whether stocks or crypto (or both) may make sense for your portfolio.

What Are Stocks?

A stock, also called one share, is a security that represents one unit of ownership of a publicly traded company.

Companies offer them on stock exchanges in order to raise money for the company itself. Investors choose to buy and sell them based on how they perform. If the stock goes up, an investor can choose to sell them based on their ability to earn a profit. They may also choose to hold onto them in order to benefit from dividends, which are payments that a company makes at certain intervals to shareholders. Buying and holding stocks can help investors grow wealth and reach specific financial goals.

In addition to buy-and-hold investing, traders can also buy and sell stocks in the short term. For example, day traders buy and sell stocks based on short-term price changes in order to make a profit.

What is Crypto?

Cryptocurrency is a form of digital currency that uses encryption algorithms. Cryptocurrency doesn’t require a central monetary authority such as a government or bank to operate. There are thousands of different types of cryptocurrency. Arguably one of the most popular and first modern cryptocurrency was Bitcoin, which was originally released in 2009 as an open-source software.

How does crypto work? To keep the definition as simple as possible, cryptocurrency is powered by blockchain networks. The blockchain is a digital ledger made up of continually growing chunks of data (or lists of records) called blocks. These blocks are linked using cryptography and are kept on multiple computers called nodes, which verify and store the data. The blockchain collects information in groups, also called blocks, which contains information such as transaction data, a cryptographic hash of the previous block and a timestamp.

Where can you buy crypto? You can buy crypto on a cryptocurrency exchange, which concerns itself completely with helping crypto investors buy, sell and store crypto. Coinbase and FTX are two examples of one of the most popular cryptocurrency exchanges. You can purchase cryptocurrencies through some brokerages, or you can also purchase cryptocurrencies through apps such as Cash App and Venmo.

What’s the Difference Between Crypto and Stocks?

The difference between crypto and stocks lies within the very basic fundamentals of each type of investment option. There are other differences between the two, but let’s take a look at a few key differences.


As mentioned before, crypto is on a blockchain, a ledger technology that logs and tracks transactions using cryptography. The benefit of blockchain technology is that as an open, distributed ledger, it permanently records transactions between two parties immediately and in a reliable way, which means that it can also reduce fraud and money tampering as well.

It’s worth noting that some sites offer stocks on the blockchain, because more and more companies have become involved in blockchain technology. However, blockchain stocks are just coming into existence and just starting to show signs of future potential — not every broker offers them.

For example, Binance allows derivatives trading on the blockchain. Derivatives are financial contracts based on the value of an underlying asset, group of assets or benchmark, which can include stocks, bonds, commodities, currencies, market indexes and more. In other words, in this case, investors can buy digital stock tokens.

Personal Information

When you purchase a stock you typically go through a brokerage, which is an intermediary that holds financial assets that you own through a bank, broker or custodian.

When you buy stocks through a brokerage, you must buy them in your own name and must always supply your address, bank account information, Social Security number and other personal information. Cryptocurrency is completely different due to its virtually anonymous nature. In fact, there is no need to know who bought the cryptocurrency in the first place.

When you buy crypto, you must keep track of it yourself, and some of the most popular ways to do so involve storing it in wallets such as hardware, software or custodial wallets:

  • Hardware wallet: A hardware wallet is a physical recording (it could be paper or metal) that holds what is known as the private key, a secure code that enables you to prove the cryptocurrency that you own. For example, Bitcoin keys have a 256-bit string (a combo of letters and numbers). Some hardware wallets store crypto and connect using USB, Bluetooth or an app.
  • Software wallet: Software wallets can come in the form of browser extensions or desktop, mobile or web apps.
  • Custodial wallet: Crypto exchanges store crypto custodial wallets. You access your crypto using a login and password but it’s important to note that you may not know the private keys like you would with a hardware wallet.

Unlike with a brokerage, you must keep track of your crypto private key, and if a hacker happens to get into your crypto wallets, you’re not protected.


Stocks, which are traded on accredited exchanges, are regulated, which gives buyers and sellers certain protections.

For example, the Securities Investor Protection Corporation (SIPC) protects you against a loss of cash and securities like stocks. It will restore your cash and securities if your brokerage fails, as long as your brokerage is a SIPC member. It’s worth noting that the SIPC doesn’t cover stock market losses or any other costs associated with normal investing risk.

Cryptocurrencies, on the other hand, are not regulated like member brokerages, which means that the government currently doesn’t regulate it. Many people who invest in crypto like this aspect of no government intervention. However, they won’t receive protection if something goes wrong with their investment.

Intrinsic Value

Cryptocurrency has no intrinsic value — it is not backed by anything. On the other hand, stocks do have intrinsic value based on the fundamental, objective value contained in these assets. You can assess stocks much more easily due to the underlying fundamentals of the companies that stocks represent.

Therefore, changes in stock prices and value of cryptocurrencies differ. Stocks might change in value based on economic indicators, a company acquisition and more. Cryptocurrencies are known for their extreme volatility but the underlying reasons may seem harder to pinpoint.

Pros and Cons of Stocks vs Crypto

Let’s take a look at the pros and cons of crypto to help you decide whether you prefer stocks vs crypto for your portfolio.

Pros of Stocks 

First, let’s take a look at the benefits of investing in stocks:

  • Solid returns: Stocks have continually shown a proven track record of solid returns over history. Since 1928, the stock market in the United States has shown an average increase of 9.8% per year.
  • Intrinsic value: Intrinsic value is a measure of what a stock is worth. As mentioned above, stocks have measurable intrinsic value compared to cryptocurrencies, which have no measurable intrinsic value.
  • Infrastructure of licensed investment professionals: According to the website of the Security and Exchange Commission (SEC), the organization exists to protect investors, maintain fair and efficient markets and facilitate capital formation. There is a certain level of protection you can enjoy when you invest or trade stocks. In addition, you can also learn more about the credentials (including violations) of brokers and investment advisors through the Financial Industry Regulatory Authority (FINRA) BrokerCheck.

Cons of Stocks

What are the downsides of investing in stocks? Let’s take a quick look at the fact that there’s a lower potential for extreme gains as well as volatility.

  • Lower potential for extreme gains: Stocks might increase in value, but you’re less likely to enjoy gains that increase incredibly over time. Cryptocurrency, on the other hand, has the potential for incredible gains as well as losses.
  • Volatility: On a day-to-day basis, stocks can experience general volatility. Certain years can also experience more volatility as well. For example, S&P 500 Index volatility in 2020 was more than double compared to the 10-year historical average from 2010 to 2019. In 2020, 42% of the trading days had + or – 1% swings.

Learn More: Is now a good time to buy stocks?

Pros of Crypto 

What are the benefits of investing in cryptocurrency? Let’s take a look at some reasons you may want to consider putting crypto into your portfolio.

  • Massive gains potential: Cryptocurrency has incredible potential for gains over time. Let’s use Bitcoin as an example. While it has shown volatility over the course of time, it was worth $0.09 in July 2010 and was at a high of $64,000 in the first half of 2021.
  • Decentralized: Decentralization means that it transfers the control from a group to a distributed network. It pulls the human element out of the process to affect the functionality of the network.
  • Possible start of a new financial system: Cryptocurrencies could possibly replace fiat currencies in the future. Banks may also change the face of blockchain transactions by introducing higher security and other benefits that blockchain opportunities offer.

Cons of Crypto  

What are the factors you should consider against investing in crypto? Let’s take a look at volatility, lack of intrinsic value and cybersecurity vulnerability.

  • Volatility: Just like the downside of stocks, volatility also plays a factor in cryptocurrency as well. In the past, Bitcoin has dropped 30% in a single day! You may face even more volatility with crypto compared to the type of volatility you’ll encounter with stocks which means more potential for massive losses.
  • Lack of intrinsic value: As mentioned above, crypto isn’t intrinsically valuable. This means that nothing backs up the value of crypto. It’s simply backed by what people are willing to trade for it, whether that comes in the form of other cryptocurrencies or cash. This means that there’s a certain level of vulnerability with crypto.
  • Cybersecurity vulnerability: Crypto is also vulnerable to theft. Hacks and scams have always been a risk at crypto’s inception, but a whopping $1.4 billion has been lost to breaches this year through the use of blockchain bridges, which allow crypto traders to quickly swap tokens.

Before you get started purchasing crypto, you may want to look into using a crypto tax calculator.

What Does the Future of Crypto Look Like?

What’s the future of crypto?

In its infancy, cryptocurrency enthusiasts involved a relatively small number of individuals — far fewer than the number of people who invested in stocks. However, the global cryptocurrency market will more than triple by 2030, which means it will top $5 billion by that year.

Our Take

It’s worth considering the pros and cons in depth before you decide whether investing in stocks vs crypto fits your preferences, risk tolerance, goals and overall needs. Digging into benefits and drawbacks can help you decide what fits your needs best.

Think you may want to invest in crypto? Track your crypto investments alongside your entire investment portfolio and other financial accounts with Personal Capital.

Get Started with Personal Capital’s Free Financial Tools


Author is not a client of Personal Capital Advisors Corporation and is compensated as a freelance writer.

Personal Capital compensates Melissa Brock (“Author”) for providing the content contained in this blog post. Compensation not to exceed $500. Author is not a client of Personal Capital Advisors Corporation. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

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