Bitcoin Vs. Stocks: A Better Investment Option?

Bitcoin and stocks are both popular investment options, but they differ in several key ways. Bitcoin is a decentralised digital currency that operates independently of any central authority, such as a government or bank. This makes it more resistant to wild inflation and corrupt banks. On the other hand, stocks represent fractional ownership of a business, and their value depends on the success of the underlying company. While stocks have a long history of solid returns and are heavily regulated, they can be volatile and subject to high taxation. Cryptocurrencies like Bitcoin are highly volatile and lack thorough regulation, but they offer a low barrier to entry, high liquidity, and the potential for outsized gains. Ultimately, the decision to invest in Bitcoin or stocks depends on an individual's financial goals, risk tolerance, and investment horizon.

Bitcoin is a decentralised currency, free from the interference of governments and central banks

Bitcoin is a peer-to-peer electronic cash system, free from the oversight of any central authority. It is issued and managed without any central authority: there is no government, company, or bank in charge of Bitcoin. This means that, unlike traditional currencies, Bitcoin is more resistant to wild inflation and corrupt banks.

Bitcoin is based on a free-market ideology. It was invented in 2008 by the unknown person or group Satoshi Nakamoto. Its use as a currency began in 2009, and it is currently used more as a store of value than a medium of exchange or unit of account. Bitcoin is a pseudonymous currency, and its use by criminals has attracted the attention of regulators, leading to its ban by several countries as of 2021.

Bitcoin's decentralised nature means it cannot be regulated by governments or central banks. It also circumvents capital controls, allowing citizens to undermine government authority. This makes governments wary of Bitcoin, and its potential to upend the existing financial system and undermine their role in it.

Bitcoin's decentralised system also has the potential to dismantle the existing financial infrastructure. Its network does away with intermediaries, meaning that a central bank would no longer be required. Crypto can be produced by anyone running a full node, and peer-to-peer automated transfers between two parties on Bitcoin's network mean intermediaries are not required to manage and distribute currency.

Bitcoin also has the potential to become a globally accepted payment method and revolutionise people's access to finances and financial services. However, most governments do not control or recognise it, and central banks cannot influence it.

Bitcoin's technology relies on algorithmic trust, and its decentralised system offers an alternative to the current system. However, due to the issues, it raises and faces; it is unlikely to replace central banks anytime soon.

Bitcoin is resistant to wild inflation and corruption

Bitcoin is a decentralised digital currency that is not issued or managed by any central authority, such as a government, company or bank. Instead, Bitcoin is a peer-to-peer system where users can be their own bank and have autonomy over their digital assets.

Bitcoin's decentralised nature makes it resistant to wild inflation and corruption. Unlike traditional currencies, which are vulnerable to inflation due to the actions of central authorities, Bitcoin has a fixed supply of 21 million coins. This limited supply means that Bitcoin's value can only increase over time as demand grows. Additionally, Bitcoin's decentralised nature makes it less susceptible to corrupt practices by central authorities, such as excessive money printing, which can devalue traditional currencies.

While Bitcoin's price can be highly volatile in the short term, it has consistently shown strong gains over longer periods. This volatility is due to its relatively small market cap and the fact that it is still in the early stages of adoption and price discovery. As Bitcoin continues to gain wider adoption and its market cap grows, its price volatility is expected to decrease.

In summary, Bitcoin's decentralised nature, fixed supply, and increasing adoption make it a strong hedge against inflation and a compelling investment opportunity for those seeking to diversify their portfolios beyond traditional stocks and currencies.

Bitcoin is easily accessible and has a low barrier to entry

Bitcoin and other cryptocurrencies have a low barrier to entry, meaning that anyone with internet access can buy, sell, or trade cryptocurrency. There are no income requirements or legal barriers to entry such as citizenship requirements or age limits. All you need is access to the internet.

This is in contrast to stocks, which require specialized knowledge and are more difficult for beginner investors to understand. Stocks are also subject to high taxation and regulation, which can make them less accessible to some people.

One of the main barriers to crypto adoption is a lack of financial and crypto literacy, which can be caused by the wealth gap, technostress, and the overuse of jargon. However, there are resources available to help people learn about Bitcoin and other cryptocurrencies, such as blog posts, videos, and online forums like Reddit.

Another barrier to entry for crypto is the complexity of cryptocurrency wallets. Wallets for traditional currencies are simple to use, but modern crypto wallets require user education and extensive documentation. However, crypto wallets are becoming more user-friendly, and there are now options for those who want an intuitive, self-explanatory wallet.

Additionally, the process of buying and selling crypto has become more accessible. Crypto exchanges like Coinbase are as easy to use as traditional e-commerce sites, and they avoid the use of jargon that can be confusing for new users. Crypto can also be purchased at "Bitcoin ATMs," which are familiar to most people and help to normalize cryptocurrency.

Bitcoin has a history of delivering high returns

Bitcoin's price history can be divided into several distinct periods, each characterised by rapid growth and subsequent consolidation. For example, in 2010, Bitcoin's price rose from $0.10 to $0.20, and by the end of the year, it had reached $0.30. In 2013, Bitcoin began the year trading at $13 and ended the year at $732. In 2017, Bitcoin's price hovered around $1,000 until it broke $2,000 in May and then skyrocketed to close at $19,188 in December.

However, Bitcoin's price is notoriously volatile and susceptible to market sentiment. For example, in 2018, after the huge melt-up of 2017, Bitcoin spent most of the year in a downtrend, falling by 73% by the end of the year. In 2021, Bitcoin climbed to a peak of over $64,000 by mid-April, but quickly lost more than 50% of its value within a few months due to warnings from China about increased pressure on the cryptocurrency industry.

Despite the volatility, Bitcoin has delivered high returns for long-term investors. For example, an early proponent who bought two pizzas with 10,000 bitcoins in 2010 would have spent the equivalent of about $40. As of March 2024, those 10,000 bitcoins would be worth over $70 million.

Bitcoin's high returns can be attributed to its limited supply of 21 million coins and its growing demand as more people and institutions adopt it. Its decentralised nature, lack of central authority, and resistance to wild inflation also make it an attractive investment option.

Bitcoin is a good investment for those seeking low-risk, long-term gains

Bitcoin has been around for 13 years and is the oldest and most popular cryptocurrency, with a market capitalization that represents over 40% of the cryptocurrency market valuation. Its longevity and popularity make it a relatively stable investment compared to newer cryptocurrencies.

Bitcoin is also highly liquid, with investors able to buy, sell, and trade cryptocurrencies on digital exchanges 24/7. It has a low barrier to entry, as anyone with internet access can buy, sell, and trade Bitcoin, regardless of income or legal status.

Additionally, Bitcoin is a decentralized currency, meaning it is issued and managed without any central authority, such as a government, company, or bank. As a result, it is more resistant to wild inflation and corruption than traditional currencies.

However, it is important to note that Bitcoin and other cryptocurrencies are highly volatile and unregulated. The value of Bitcoin can fluctuate drastically due to speculation and sentiment, and there is no intrinsic value backing the currency.

When considering investing in Bitcoin, it is crucial to weigh the risks and rewards and make decisions based on your financial goals, risk tolerance, and time horizon.

Frequently asked questions