How Does Crypto Investing Compare to Other Investments?

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If you’re like most investors paying attention to headlines, then you’ve given at least some thought to adding popular cryptocurrencies like Bitcoin into your growing portfolio. You might know a friend, family member, or colleague who has already done it. And, with Bitcoin’s historic run last year, it seems like crypto investing could be a profitable opportunity.

But, should we even be thinking about cryptocurrencies as a type of investment? If so, how does it compare to other investments like stocks, bonds, and real estate?

Cryptocurrency is Currency

Think about it this way. You’re planning to visit Europe for a two-week vacation and convert $1,000 USD to euros. How closely do you pay attention to the exchange rate? Chances are it won’t factor into your decision as much as the overall timing of your vacation based on your wants, needs, and available vacation days. If the exchange rate becomes more favorable when you convert back, and you end up with a $5 profit, you wouldn’t consider that a return on your investment. Nor do many investors have a significant stake in foreign currency as part of their overall portfolio (though it is known to happen).

At its core, despite being digital and groundbreaking in several unique ways, Bitcoin and its contemporaries are still just currencies. They’re intended to be used like currency as a form of exchange for goods and services. This makes them different from most investments. For example, they are more akin to property. You can buy a stake in a public company or purchase a piece of real estate. Then, you can financially gain from your ownership of those stakes.

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