Advantages and Disadvantages of Cryptocurrency Investments and Stock Investments

Stock and cryptocurrency Investment 00Stock and cryptocurrency Investment
Table of Contents|Executive Summary |Introduction | Stock Market | Cryptocurrency | Comparison between the stock and crypto investment | Risks and Safety | Time horizon | Portfolio management | Conclusion | Works Cited 
Executive Summary
Cryptocurrency and stock investments are among the various capital market investments that have been recently at the core of the present economy. Undoubtedly, the two forms of investments have their advantages and disadvantages, which every investor should consider before investing. Hence, this report executes an in-depth analysis of the two investment types to understand their advantages and disadvantages to guide investors on their investment choices.
Introduction
Cryptocurrency is an investment that has taken the global market by storm in recent years. According to Bloomberg, the total value of digital currencies has grown to more than two trillion dollars, with bitcoin as the most popular form of the coin. Many investors have dived into this market with less knowledge of crypto trading, a venture which has created losses and profits in equal measures for the investors. Consequently, the growth of cryptocurrency has attracted criticisms from investors who question the current stock trading's position in the market. Investors think that the stock exchange market seems to be overpowered by cryptocurrency due to its rapid growth. However, there is a considerable distinction between cryptocurrencies and stocks, which one should understand before deciding where to invest (Lammer). The critical detail to understand is that stock is the ownership in a business that can be backed by a company's cash flow and assets. On the other hand, cryptocurrency is not supported by any asset or cash flow. While considering an investment in cryptocurrencies, it is essential to be aware of what one is purchasing, considering that there are no supporting assets that can be used to compare to the traditional forms of investments that possess a solid and long-term track record of acquisitions.
The valuation of cryptocurrencies is an entirely different analysis than the process by which stocks are valued. The price volatility in cryptocurrencies is often influenced by news and rumors about the expanding uses and markets for the currencies. It is very different from the complex accounting data, which is the backbone of stock valuation. Suppose an investor cannot understand what influences the outcomes and risks encountered during an investment; in that case, the investments will be equated to gambling, whose results are only known statistically. Therefore, this report explains the different ways in which stocks and cryptocurrencies can be invested and the information needed to make informed choices before investing.
Stock Market
Stock refers to the ownership of a share of a publicly-traded company. In every share of stock, one can purchase a given percentage of ownership of the company itself. The company's ownership is defined by the proportion of the number of shares offered by a company. The investor makes money by selling the stock shares to other investors, referred to as capital gains related to the difference between the amount paid for an asset and the profit they get for selling it. The benefits that one gets from the stock investments are dependent on the company in which shares are being traded. Besides, stock values are likely to increase when the company pays dividends to the investors through the voting power as shareholders and the rights from the ownership held in a company (Kozak). Different companies have different ways to handle their dividends and give their rights to the voting shareholders, which helps define how the stocks will be traded.
Stock purchase is similar to having a fraction of ownership in a company. Without proper analysis, the thought of getting a fraction of ownership can be enticing due to the anticipation of future profits. Legal ownership gives the investor the right to inquire about the organization's cash flows and assets. The rights to claim are usually a backup for the investment, which can also be used as a form of valuation (Lahmiri). Thus, stock prices typically rise and fall because they are likely to move over time, meaning future costs are not well indicated and cannot be defined. Hence, investors are usually very optimistic about the growth of their shares and the stock they have, hoping that the price will grow in the future. However, the change in the stock prices depends on the company's growth, which the investor cannot control. Therefore a company's success over the long term determines if the stock will rise or fall. Hence, for an individual to realize a positive stock investment, the company should have solid profitable growth.
Cryptocurrency
Cryptocurrency is a ...