Crypto vs stocks

Aug 21, 2025

Stocks

A stock is a fractional ownership interest in a business. It’s easy to lose sight of this, if you become overwhelmed by the wiggling stock prices — and the potential for profit. As a legal ownership stake in the business, the stock gives shareholders a claim on the assets and cash flow of the business. These back your investment and provide a basis for its valuation.

Cryptocurrency

Cryptocurrency has taken the world by storm, especially during the last few years. After having topped out around $3 trillion in 2021 and falling in 2022, the total value of all these digital currencies now sits at about $3.4 trillion as of July 2025, according to CoinMarketCap.com. Of these, Bitcoin is the most popular, worth more than $2.1 trillion itself. Investors have swarmed to this digital gold rush, often with little knowledge and a lot of hope.

Generally, cryptocurrency is backed by no hard assets (specialized stablecoins being an exception), and that’s the case for the most popular crypto coins such as Bitcoin and Ethereum. A cryptocurrency may allow you to perform certain functions, such as sending money to another person or using smart contracts that automatically execute after specific conditions are met.

Pros and cons of investing in cryptocurrency vs. stocks

Pros of investing in cryptocurrency

Possible hedge against fiat currency: For some investors, one of the biggest appeals of cryptocurrency is its decentralized nature. It’s not controlled by central banks or governments who like to print money and generate inflation in fiat currencies such as the U.S. dollar or the euro. Cryptocurrency has been called “digital gold” by some investors who hold it because they think it will protect them from inflation.

Potential for outsized returns: Buying cryptocurrencies creates the potential for large gains on your investment. Several cryptocurrencies have seen their prices skyrocket since first being introduced. These gains are the main reason people are attracted to cryptocurrencies, but the potential for price appreciation comes with significant risk.Growing number of coins: In the early days of cryptocurrencies, there were just a few coins that could be invested in, but speculative interest has changed that. New coins are introduced regularly and there are now thousands to choose from.
Wide interest in digital currencies: There seems to be a growing interest in cryptocurrencies from investors, companies and governments. Tesla holds Bitcoin on its balance sheet and briefly accepted the digital currency as payment before reversing course. El Salvador adopted Bitcoin as legal tender in 2021, though the International Monetary Fund has urged the country to reverse its decision. Increasing acceptance of digital currencies could be positive for investors.
Growing number of coins: In the early days of cryptocurrencies, there were just a few coins that could be invested in, but speculative interest has changed that. New coins are introduced regularly and there are now thousands to choose from.
Wide interest in digital currencies: There seems to be a growing interest in cryptocurrencies from investors, companies and governments. Tesla holds Bitcoin on its balance sheet and briefly accepted the digital currency as payment before reversing course. El Salvador adopted Bitcoin as legal tender in 2021, though the International Monetary Fund has urged the country to reverse its decision. Increasing acceptance of digital currencies could be positive for investors.
Possible hedge against fiat currency: For some investors, one of the biggest appeals of cryptocurrency is its decentralized nature. It’s not controlled by central banks or governments who like to print money and generate inflation in fiat currencies such as the U.S. dollar or the euro. Cryptocurrency has been called “digital gold” by some investors who hold it because they think it will protect them from inflation.
Potential for outsized returns: Buying cryptocurrencies creates the potential for large gains on your investment. Several cryptocurrencies have seen their prices skyrocket since first being introduced. These gains are the main reason people are attracted to cryptocurrencies, but the potential for price appreciation comes with significant risk.
Growing number of coins: In the early days of cryptocurrencies, there were just a few coins that could be invested in, but speculative interest has changed that. New coins are introduced regularly and there are now thousands to choose from.
Wide interest in digital currencies: There seems to be a growing interest in cryptocurrencies from investors, companies and governments. Tesla holds Bitcoin on its balance sheet and briefly accepted the digital currency as payment before reversing course. El Salvador adopted Bitcoin as legal tender in 2021, though the International Monetary Fund has urged the country to reverse its decision. Increasing acceptance of digital currencies could be positive for investors.

Cons of investing in cryptocurrency

Extreme volatility: Cryptocurrencies have been extremely volatile so far in their relatively young existence. They aren’t backed by anything, so the price they trade at is determined by the whims of traders. Fortunes can be made and lost quickly and there’s no telling where a coin might trade next.
Cybersecurity risks: Despite cryptocurrency enthusiasts touting the security benefits of digital coins, there have been notable hacks involving cryptocurrencies. It is often difficult to recover stolen funds.
No intrinsic value: Cryptocurrencies have no intrinsic value, which means they aren’t backed by underlying assets or earnings the way that stocks are. Stocks have value because of their future earnings power and what they will return for their owners, while cryptocurrencies offer nothing of the sort.
Regulatory risks: While El Salvador has embraced Bitcoin, many governments are much more skeptical about cryptocurrencies. China has banned them altogether, other countries could follow and the U.S. is regulating them, though President-elect Trump is expected to have a crypto-friendly administration.
Extreme volatility: Cryptocurrencies have been extremely volatile so far in their relatively young existence. They aren’t backed by anything, so the price they trade at is determined by the whims of traders. Fortunes can be made and lost quickly and there’s no telling where a coin might trade next.
Cybersecurity risks: Despite cryptocurrency enthusiasts touting the security benefits of digital coins, there have been notable hacks involving cryptocurrencies. It is often difficult to recover stolen funds.
No intrinsic value: Cryptocurrencies have no intrinsic value, which means they aren’t backed by underlying assets or earnings the way that stocks are. Stocks have value because of their future earnings power and what they will return for their owners, while cryptocurrencies offer nothing of the sort.
Regulatory risks: While El Salvador has embraced Bitcoin, many governments are much more skeptical about cryptocurrencies. China has banned them altogether, other countries could follow and the U.S. is regulating them, though President-elect Trump is expected to have a crypto-friendly administration

Pros of investing in Stocks

Long history of solid returns: Stocks have a long track record of producing solid investment returns, with the S&P 500 stock index returning about 10 percent over the long-term. Though stocks can be volatile in the short term, they have generally been safe to hold over long periods of time.
Have intrinsic value: A stock represents an ownership interest in a company and its value over time depends on the success of the underlying company. Companies own assets that produce earnings and cash flow for investors, creating what’s known as intrinsic value.
Accessible: It is easier than ever to invest in stocks these days with many online brokers cutting trading fees to zero. You can invest in individual stocks or choose to purchase a diversified basket of stocks through an index fund. Index funds help keep costs low and you can build a diversified portfolio even if you don’t have much money to start with.
Stronger regulation: Stock exchanges, brokers and companies are all heavily regulated through various government agencies. Companies are required to provide certain information to investors through the Securities and Exchange Commission. No regulatory body is perfect, but stocks have been around for a long time and there are certain important investor protections in place.

Cons of investing in stocks

Volatile: When you hold a broad basket of stocks through index funds, stocks are less volatile than cryptocurrencies. Individual stocks can be more volatile, but typically less so than cryptocurrencies. Because of this volatility, stocks are best held as part of a long-term investment plan, so you have time to recover from any short-term losses.
Lower potential for extreme gains: Broad stock indexes such as the S&P 500 likely have less potential for the extreme gains that can sometimes be found among cryptocurrencies. Stocks have returned about 10 percent per year over the long term, whereas it’s not uncommon for cryptocurrencies to move 10 percent in a single day.

credit: bankrate