Cryptocurrency And Traditional Financial Instruments (For Investors)

In recent years, cryptocurrency has become an attractive investment option. Glenn Goodman, a senior cryptocurrency trader, believes that the rise of virtual cash is a “challenge”. One time in an era “; he further added:” Individuals should “. He seized it with both hands and warned:” But the risk of investment is as big as the compensation.

Most investors are generally risk averse in their investment. They like to invest in cryptocurrency trading platforms, and can gain the maximum benefit from zero or minimum loss. For them, traditional financial instruments are investment without loss, but when it comes to digital currency, I am very worried.

But recently, investors have poured into the digital currency market, getting rid of potential disdain. In the latest research of Grayscale Investments and Q8 Research, a survey of 1100 American investors shows that 40% of the respondents are enthusiastic about holding Bitcoin.

Let’s take a look at the comparison between cryptocurrency(Bitcoin) and traditional financial instruments(stocks and bonds) to see the advantages and disadvantages.

Stocks, Bonds and Bitcoin

Bonds are similar to fixed income loans provided by investors to organizations or governments. Although investing in stocks brings investors shares of listed companies. When investors invest in Bitcoin, they become owners of virtual currencies that are not controlled by the central bank. Different from the point-to-point trading of digital currency, some management institutions supervise and manage the investment in stocks and bonds.

Investors can sell Bitcoin to a third party and exchange it for cash or goods or services of equal value. Bonds can be recovered at the time of development, and investors can obtain the face value of bonds. In addition, investors can sell or transfer their shares at the market price. If the market is good, sales will bring them profits, otherwise they will lose money.

Unstable asset type

Bitcoin and stocks determine their respective market differential values and therefore belong to volatile or unstable asset classes. Bonds are usually stable assets, so they usually earn low returns.

As the digital money market is still developing, Bitcoin is more volatile than stocks. If the stock market is a mature financial institution controlled by the regulator, on the other hand, the regulator does not control the crypto exchange,

However, in the years of cryptocurrency exchange market development, the volatility of Bitcoin can be reduced in proportion to the number of organizations traded in stock exchanges. In October 2018, CBE global market noticed that the historical instability of Bitcoin fell to 31.5% on the 20th, lower than that of Amazon. com(35%).Netflix(52%).Nvidia Corp(40%). In addition, it is found that the cost of Bitcoin is as stable as Apple stock.

ROI

Bond interest is very low. Interestingly, if the market goes astray, risk aversion will make stocks stand out. However, when the market rises, investors can get huge profits from their investments. Bitcoin can bring huge profits to its investors; the annual yield is 2000%. If the market experiences sharp rise and fall, the loss is also huge.

Conclusion: As the growth of ICO in the cryptocurrency trading market slows down, the new enterprises are obviously looking for new ways to raise funds. In addition, investors are looking for new ways to protect and grow assets. Believe it or not, cryptocurrencies have been gradually accepted around the world in recent years.