Crypto vs Stocks: 12 Similarities and Differences

Cryptocurrency and stocks are some of the biggest asset classes in the world and they offer fantastic investment opportunities.

On average, the S&P 500 has returned over 10% year on year, while Bitcoin and other cryptocurrencies have had 10x multiples in the past decade.

That’s all well and good. But you are probably asking, how do they compare?

Don’t worry, in this article, I will be answering that question and much more. So without further ado, let’s jump right in.

What are cryptocurrencies?

Cryptocurrencies are decentralized digital assets that utilize blockchain technology. This technology uses a distributed ledger that records all transactions and other relevant metadata including wallet addresses, timestamps, etc.

All transactions are immutable and transparent. In other words, anyone can view this information on the blockchain and transactions cannot be undone.

Moreover, cryptocurrencies are secured by a decentralized network of computers known as nodes. This creates a permissionless system that anyone can enter.

What are stocks?

Stocks represent equity in a company. In most instances, as a company grows and expands sell shares of it to investors and other interested parties.

Additionally, they can distribute the company’s profits in the form of dividends. Consequently, as the performance of the company improves so do the stock price and dividends.


Manipulation – both stocks and cryptocurrencies can be manipulated by bad actors. One notable example is pump and dumps. Large buy orders artificially inflate the price often initiating short squeezes and bots to initiate buys.

Then once the asset has reached a significant value they are dumped leaving retail investors with worthless tokens. This is usually done using penny stock and low market cap cryptocurrencies that have less liquidity.

Slippage – both crypto and stocks suffer from slippage. This is the difference between the expected market price and the actual trade price. It occurs between the delay of trade being ordered and when it is executed.

Digital trading instruments – the two asset classes can be traded digitally and in most cases use an order book or order matching algorithm.

Moreover, they both feature exchanges offering various financial instruments such as options trading and futures trading.

Trading fees – cryptocurrencies and stocks both have trading fees. For the stock market, this is usually in the form of a brokerage fee. While for cryptocurrencies this is exchange fees and gas fees.

Price action – penny stocks can often have similar price action to cryptocurrency. Oftentimes they have huge price swings due to low liquidity. However, this is an exception to the rule but is an important point nevertheless.


Risk – there is no denying that cryptocurrencies are more susceptible to risk. This is evident by the extreme volatility of this asset class. Moreover, there are countless hacks and scams.

Conversely, stocks have less volatility and this is especially the case when you look at the asset class as a whole. This is mainly because the financial industry is more mature and has a higher market cap.

Regulation – the rules in the traditional finance world are stringent. For instance, US stock exchanges have to abide by the rules, whereas cryptocurrency exchanges have little regulatory oversite.

Returns – overall, the cryptocurrency asset class has vastly outperformed stocks over the past decade. In 2021 alone the market cap of cryptocurrency moved over 200% with Ethereum appreciating over 700%.

When compared to the ten-year return of the S&P 500 of just 180% this is considerably higher.

Liquidity – the global cryptocurrency market cap is just under $1 trillion. As a result, less money is needed to move the market which leads to higher volatility.

On the other hand, the market cap of all traded companies worldwide is over $90 trillion.

Accessibility – cryptocurrencies utilize permissionless technology meaning anyone can access them. On the other hand, stocks often require users to meet the eligibility criteria.

For example, this could include the correct country of residence or the minimum required net worth.

Decentralization – thanks to the underlying technology, cryptocurrencies are secured by a decentralized network of computers.

As a result, there is not a single point of failure. On the other hand, stocks are often traded on centralized servers. Therefore, this can lead to bottlenecks and outages.

Trading hours – cryptocurrencies trade 24/7, while stocks trade during business hours.

What’s the better choice?

As you can see, crypto and stocks are similar in some ways but different in others. For instance, stocks are more suitable for the risk-averse. They are less volatile and don’t suffer to the same extent from hacks and scams.

That being said, for investors with a high-risk appetite then crypto may be the best bet. The asset class as a whole has vastly outperformed stocks and in my opinion, this will not change.

Ultimately, the technology is still in its infancy and will continue to grow. But at the end of the day, both of them have their pros and cons. I hope you found this article useful and thanks for reading.

Want to learn about crypto whitepapers? Click here to read my previous article.