There are many arguments about which form of trading is better when it comes to Bitcoin or stocks. There are also arguments for other forms of trading, like Forex, but we will be looking at Bitcoin v/s stocks in this post.
It’s difficult to say which is better because both have their benefits and disadvantages. For one thing, when you buy shares in a company, you can make money if the company does well and if the share price goes up, so there’s a risk element too. However, with Bitcoin, there’s no risk your investment will either rise or fall depending on changes in supply/demand only. So every penny you spend on bitcoin equals one whole bitcoin.
Also, Bitcoin trading fees are lower, so for instance, if you bought £10 worth of bitcoin in 2011, then now that same BTC is worth £9.18 = £8.98 less. However, your share price is likely to have risen because you bought more shares, so the average price per share will usually be higher than the cost of buying and holding shares. There’s also a risk that the share price will fall, though it’s unlikely you could lose money unless you were trading Vodafone or Npower!
What makes bitcoin a better trading asset?
Bitcoin is now being used as an investment option by some investors. This digital currency allows users to make anonymous transactions and is presided over by a decentralized network that could be seen as the future of money. Bitcoin has been on the rise since 2009 and continues to generate many questions about its potential uses. Some people believe it will be used in everyday transactions because of its convenience and anonymity. In contrast, others remain sceptical that it would ever take off due to volatility, regulation, and dependence on computer infrastructure. Regardless of your opinion, Bitcoin’s value has increased exponentially since inception, with a total market capitalization exceeding $500 billion in early 2017 alone.
- No transaction fees:
Bitcoin is, first and foremost, about being decentralized and eliminating the need for third parties in transactions. Bitcoin is as close to a cashless society as we’re likely to see. Nowadays, every transaction that you make involves using a bank account, credit card or PayPal option. Bitcoin takes the opportunity of these digital transactions and removes the middleman by allowing users to settle their balances without involving banks. Eliminating the middleman in transactions increases security since there is no third party that can be hacked or compromised. Also, you don’t have to pay excessive amounts of money when settling your balance due to transaction fees.
- No exchange rate risk:
One of the people’s main issues with trading in commodity markets is exchange rate risk. It’s a big headache when you purchase a commodity such as gold and then immediately try to sell it back at another price. The seller may give you a lower price, but you don’t know if he’s trying to be nice or has so much demand for the metal that he can give you a lower price. Or maybe the seller doesn’t want to keep your gold for very long and is just looking for an easy sale. As a result, you give up control over what price you get your gold at and instead have to rely on other market factors such as pricing trends, supply and demand, etc.
- Anonymity:
With Bitcoin’s high level of anonymity, it gives you the liberty to use your money the way you want without being tracked or having to answer questions about your trading or financial activities. So whether you’re a business owner looking for anonymous payment options for clients, an individual looking for freedom from government surveillance, or just someone that doesn’t want anyone tracking how they spend their money, Bitcoin is always there as a cash alternative.
- Independence from banks:
Bitcoin offers people autonomy from the centralized monetary system. As mentioned before, by removing third parties in transactions, users are free to settle their balances on their terms and at their rates. Moreover, by working without the involvement of banks, Bitcoin is not beholden to the whims of central banks and government debt collectors.
- No-fiat currency:
The US dollar is backed by the US government, which means if you receive money from them, it comes with a “you owe me” note attached. Another name for the greenback is “legal tender,” which means you have to use it lawfully, like paying your taxes or fines even if you don’t want to keep it or deposit it in your bank account. The federal government has also given itself complete control over how much money they issue and its set interest rates.