Bitcoin is NOT a replacement to the Stock Market/ traditional investments

[ChiBitCTy]

I think it's important to first note that inherently bitcoin is NOT an investment.  Now of course like all other forms of currency, it has become an investment, and or something you can "trade".  With the bitcoin price rise of late, where a lot of people have been doing well making money, I thought this was a perfect time to discuss this.

When I see people say their investment portfolios are solely made up up cryptocurrencies I cringe.  The stock market is made up of stocks ( companies that have gone public and issue shares ).  Stocks are backed by actual businesses.  These business offer a service or tangible good.  Bitcoin/cryptocurrency is simply digital currency.  Bitcoin is not  backed by an actual real world business producing goods and or services and that's the important difference people need to understand.  

This is similar to the "Gold or Bitcoin" discussion.  Gold is a physical asset, it is used for jewelry, used for electronics etc.  It has real world physical aspects.  Now it does have some similar features.  Both are considered "assets".  Both have become investment "hedges"...but inherently they are two completely different things.

A proper investment portfolio should really have 3 aspects ...short , mid, and long term "buckets".   Short Term would be things like your checking account.  Mid Term would be things such as savings accounts ( pro-tip..always use online banks such as Ally Bank for savings accounts.  They offer MUCH higher interest rates than traditional brick and mortar banks such as Chase/Bank of America etc), online trading accounts such as TD Ameritrade/E-Trade etc.  Long Term would be things such as your IRA/401k etc.  

Now as long as you have these 3 Buckets established, then "investing" in bitcoin/cryptocurrency can make sense.  It's important to try and throw in some of those "home run" type investments in your portfolio.  These types of investment you go in to with the realization that they are volatile and could easily lose it's entire value quickly.  However they can certainly help your portfolio tremendously when they "hit".  Normally you want to keep around 5-10% of your portfolio in assets such as these.  

Now of course all of this depends on ones net worth, salary, current and future budget etc.

As a licensed Investment Advisor by trade I say all this with well over a decade of experience.  I see too many people with unrealistic expectations and thoughts on bitcoin and cryptocurrency as an investment.  Yes Bitcoin and many crypto coins have performed well and people have an continue to make good money from it ..but that DOESN'T mean it's a replacement for traditional investments.  Countless people have already lost their life savings by treating cryptocurrencies as traditional investments and will continue to.    

Note: I realize not everyone has access to traditional types of investments.

[hatshepsut93]

Does anyone even say that Bitcoin is a replacement for stocks? I never heard such thing. But how can you argue that Bitcoin is not an investment, if people invest in it?

When I see people say their investment portfolios are solely made up up cryptocurrencies I cringe.  The stock market is made up of stocks ( companies that have gone public and issue shares ).  Stocks are backed by actual businesses.  These business offer a service or tangible good.  Bitcoin/cryptocurrency is simply digital currency.  Bitcoin is not  backed by an actual real world business producing goods and or services and that's the important difference people need to understand. 

Bitcoin is a currency/commodity, of course it's not backed by real world business, just like gold and oil aren't backed by them too. Bitcoin is a risky investment, but so are stocks, especially those with smaller capitalization or if a trader decides to use leverage and other instruments. I can even be sure that more people lose money with stocks than with crypto, since stocks are more popular.

[ChiBitCTy]

Does anyone even say that Bitcoin is a replacement for stocks? I never heard such thing. But how can you argue that Bitcoin is not an investment, if people invest in it?

When I see people say their investment portfolios are solely made up up cryptocurrencies I cringe.  The stock market is made up of stocks ( companies that have gone public and issue shares ).  Stocks are backed by actual businesses.  These business offer a service or tangible good.  Bitcoin/cryptocurrency is simply digital currency.  Bitcoin is not  backed by an actual real world business producing goods and or services and that's the important difference people need to understand.  

Bitcoin is a currency/commodity, of course it's not backed by real world business, just like gold and oil aren't backed by them too. Bitcoin is a risky investment, but so are stocks, especially those with smaller capitalization or if a trader decides to use leverage and other instruments. I can even be sure that more people lose money with stocks than with crypto, since stocks are more popular.

Yes, I see people all the time stating cryptocurrency is a replacement for stocks. ( ex https://bitcointalk.org/index.php?topic=5284547.msg55456951#msg55456951 )

“More people losing money with stocks than with crypto”.. there’s no comparison here. Two entirely different things and the stock market has far more money in it, been around far longer etc.  A weird statement to make coming from someone who says they realize there’s a difference between the two.

Edit: this post is more so for those who don’t understand the financial world very well. Not those who do.

[dothebeats]

Bitcoin and cryptocurrencies in general is a great alternative for stocks and traditional assets, but certainly not something that one can go 100% on if they aren't well-versed on trading and handling their finances. I also find it quite irresponsible for most people biased on bitcoin to literally just tell people--especially the noobs--to just buy bitcoin and nothing else. Oftentimes this is what leads to people losing their money because they aren't that knowledgeable enough to weigh the risks associated with this move, therefore spelling disaster in their finances should crypto goes down the drain. Though of course, you cannot blame those who made their fortune on bitcoin and crypto alone to recommend buying such instead of traditional assets. It's how 'success stories' are crafted, after all, and you need to have those floating around in order to have more people buying the same bags as you do.

[jackg]

Yeah no one should have 100% crypto (or at least not many).

I can still argue platinum is better for industrial practices than gold but jewellery is still dominated by gold and diamonds.

My personal portfolio is about 75% crypto and 25% stocks with around 12 months of expenses in a bank account just in case... (im at a higher risk due to age I wouldn't recommend this - and also I haven't rebalanced since the 8k region when it was 50:50).

I think also some of this problem is due to quite a few companies in the stock markets not paying dividends and making themselves speculation assets. I'm also not entirely sure why people would rather go for those than go for something that'll return you 5% in dividends a year plus have an average 4% growth than growing by 9/10% a year.

[avikz]

Bitcoin is NOT a replacement to the Stock Market/ traditional investments

I think only a fool would take bitcoin/cryptocurrency in that way! I know there are some puritans who definitely think in Similar line but they are just fools, you can't really consider them! Probably they are the one, who have a portfolio build only on cryptocurrency!

It is obviously true that bitcoin was introduced as a currency but it has indeed emerged as an investment. It's because of the regulatory hurdles bitcoin is facing around the world which left us with a very limited number of merchants who actually accepts bitcoin as a payment method. I am sure, this issue will be resolved eventually but as of now it looks great as an investment only!

[Sterbens]

Simply put, investing is an activity that is investing in the hope that someday the capital will provide more benefits because it is invested in a valuable asset / item. be it a kind of gold, copper, silver, bitcoin, be it antiques, property or land. as long as there is a reciprocal of what is planted.
I think it makes sense that bitcoin, another cryptocurrency, is said to be an investment. Why? It is clear when referring to the meaning of investment. maybe you know better than I do, or you know better. but I ask permission to speculate. because for me it depends on how someone implements it. If someone aims to invest their money with bitcoin at a price of $ 10,000 then the next time the bitcoin price becomes $ 15,000, then there is a reciprocal benefit, which is around $ 5,000. the law automatically falls into the investment category.

[LUCKMCFLY]

Traditional investments in the stock market have always set a pattern, have a history, their downfalls and have risen from the deep, unlike Bitcoin, the stock market moves very slowly, investments tend to pay off mainly after approximately 8-10 years old, on the other hand, bitcoin possesses volatility, and volatility is the ingredient that the stock market does not have.

If we think about the future, bitcoin is the best option, it may be that in the present and after 5 to 10 years, the stock market for many is the salvation, but the Bitcoin market can achieve Financial Freedom quickly, without waiting so many years.

[blockman]

I don't recommend for anybody to replace their stocks with cryptos. It's always the best to have them both. But for someone that likes to take risk more than I could, I'm good to crypto only combination.
I have other traditional investments but not with stocks anymore. But if somebody decides to go all for crypto, he has to make sure that he knows what he do.

[20kevin20]

I think it's important to first note that inherently bitcoin is NOT an investment.  Now of course like all other forms of currency, it has become an investment

Well, these two are definitely conflicting ideas. It either is or isn't. If Bitcoin has become an investment, then it is.

When I see people say their investment portfolios are solely made up up cryptocurrencies I cringe.  The stock market is made up of stocks ( companies that have gone public and issue shares ).  Stocks are backed by actual businesses.  These business offer a service or tangible good.  Bitcoin/cryptocurrency is simply digital currency.  Bitcoin is not  backed by an actual real world business producing goods and or services and that's the important difference people need to understand. 

So what's the point here? Bitcoin is an investment, cryptos are investments as well as real estate, precious metals etc. An investment portfolio can be entirely made out of cryptos, because you just admitted (I think) in the previous quote that Bitcoin has definitely become an investment.

This is similar to the "Gold or Bitcoin" discussion.  Gold is a physical asset, it is used for jewelry, used for electronics etc.  It has real world physical aspects.  Now is does have some similar features.  Both are considered "assets".  Both have become investment "hedges"...but inherently they are two completely different things.

Well, any 2 assets you take are two completely different things - and that includes assets that are part of the same category (say copper and gold).

Mid Term would be things such as savings accounts ( pro-tip..always use online banks such as Ally Bank for savings accounts.  They offer MUCH higher interest rates than traditional brick and mortar banks such as Chase/Bank of America etc), online trading accounts such as TD Ameritrade/E-Trade etc.

I'd advise to check and calculate interest rates vs annual inflation as well. Many times, the interest rate ends up to be actually lower than the annual devaluation of your sum.

Now as long as you have these 3 Buckets established, then "investing" in bitcoin/cryptocurrency can make sense.  It's important to try and throw in some of those "home run" type investments in your portfolio.  These types of investment you go in to with the realization that they are volatile and could easily lose it's entire value quickly.  However they can certainly help your portfolio tremendously when they "hit".  Normally you want to keep around 5-10% of your portfolio in assets such as these. 

Honestly, I would say this isn't necessarily true. Besides Bitcoin's ATH (which is only $4k from today's price), you'd be on a profit no matter when you've invested in BTC since its inception. People lose money because they are greedy and unexperienced, and they're being controlled by emotions. My crypto portfolio has done very, very well so far. Bitcoin's price crashes do not make for bad investments. Gold crashes as well, so does silver, so do stocks. It's all about you choosing the right time to cash out, hodl or invest.

Countless people have already lost their life savings by treating cryptocurrencies as traditional investments and will continue to.   

Before investing in anything, you have to do research. If everyone who invested in BTC did proper research about its past and had not pushed themselves into extreme greed waiting to become rich, things would've looked different. I'm not saying someone should invest their life savings into cryptos, but if you can't help but be led by market FUD and stuff like that, then take some time and educate yourself before you put your life savings into something. The idea itself that you have spent a life saving bucks and randomly invest it all into something you have never studied in your life is very stupid.

[dunfida]

I don't recommend for anybody to replace their stocks with cryptos. It's always the best to have them both. But for someone that likes to take risk more than I could, I'm good to crypto only combination.
I have other traditional investments but not with stocks anymore. But if somebody decides to go all for crypto, he has to make sure that he knows what he do.

We do always have that common investment line;

"Dont put all your eggs in one basket"

This is why i do always consider on putting up some funds in stocks and at the same time i do put also in forex and then lastly is on crypto.
It might quite be a stressful thing yet handling multiple investments isnt easy as it sounds.Why would need to replaced if you can
engage with both?

[blockman]

I don't recommend for anybody to replace their stocks with cryptos. It's always the best to have them both. But for someone that likes to take risk more than I could, I'm good to crypto only combination.
I have other traditional investments but not with stocks anymore. But if somebody decides to go all for crypto, he has to make sure that he knows what he do.

We do always have that common investment line;

"Dont put all your eggs in one basket"

This is why i do always consider on putting up some funds in stocks and at the same time i do put also in forex and then lastly is on crypto.
It might quite be a stressful thing yet handling multiple investments isnt easy as it sounds.Why would need to replaced if you can
engage with both?

It is stressful but there's always the good side of it. Whenever the other investments you have plummet, you always have the other investments which will make you recover. There could be times that all of them are going to bleed but as an investor, you know what exactly what to do if that time comes. I agree that engaging in both or as many as you can which will not compromise your productivity of monitoring it and managing it is still a better decision.

[fauzan123]

I don't recommend for anybody to replace their stocks with cryptos. It's always the best to have them both. But for someone that likes to take risk more than I could, I'm good to crypto only combination.
I have other traditional investments but not with stocks anymore. But if somebody decides to go all for crypto, he has to make sure that he knows what he do.

It is better to invest in both of them, because as we all know the price movement in crypto itself is very significant, of course this must also be aware of how much risk we can get when using it.

[Oilacris]

I don't recommend for anybody to replace their stocks with cryptos. It's always the best to have them both. But for someone that likes to take risk more than I could, I'm good to crypto only combination.
I have other traditional investments but not with stocks anymore. But if somebody decides to go all for crypto, he has to make sure that he knows what he do.

We do always have that common investment line;

"Dont put all your eggs in one basket"

This is why i do always consider on putting up some funds in stocks and at the same time i do put also in forex and then lastly is on crypto.
It might quite be a stressful thing yet handling multiple investments isnt easy as it sounds.Why would need to replaced if you can
engage with both?

It is stressful but there's always the good side of it. Whenever the other investments you have plummet, you always have the other investments which will make you recover. There could be times that all of them are going to bleed but as an investor, you know what exactly what to do if that time comes. I agree that engaging in both or as many as you can which will not compromise your productivity of monitoring it and managing it is still a better decision.

Agree!
I would rather to have that stressful situation rather than missing out the opportunity for some possible recovery in case those other investment of yours are going on reds.
You would definitely had that chance of recovery since you can patch up on what you had lost.

When dealing with stocks then profits arent really that high basing on the lot size that you had put and since its volatility isnt really that high compared to crypto then
you would really be having that kind of slow or gradual loss into your portfolio unlike here where within a snap it can blow out your entire capital.

[2double0]

Bitcoin was made to be used both - technically and economically. Technically - where new developments will take place any moment and add up more for the better of btc and its users and Economically - where btc is seen as a safe haven investment and a store of value hand in hand. It is said that anything that has a lot of demand will get its worth more and more expensive. Nothing can be expensive than trust and when investors are trusting btc to be their all-in-one asset to invest their portfolio in and sit back and wait, I think there is nothing wrong even in seeing btc as a replacement to stocks because investors are losing their confidence out of stocks and that whole confidence is shifted into btc.

[Natalim]

Bitcoin is not a traditional investment, stock market is centralized while bitcoin is not, therefore they have their own market and there's no way the decentralized market will take over in the investment world, the centralized market which is back by the government will still remain as the most invested market due to its security and proper regulation.

We are just getting a small pie of investments but it's already a success for Bitcoin.

I certainly believe that Bitcoin will remain volatile, what we are seeing now which is a pump could soon result to some big massive dump.

[HeRetiK]

And stocks are NOT a replacement for Bitcoin!


Obviously I'm biased but in my opinion cryptocurrencies -- in small, deliberate holdings -- can serve as both a hedge and a potential moonshot in any portfolio in a way that no other asset can.

Small caps or specialized funds? Potential moonshots (albeit on a smaller scale), not really a hedge though.

Gold and precious metals? Decent hedge but not much moonshot potential.

Real estate and venture capitalism is out of reach for most people and funds that give you access to either will smother most potential gains with their fees or keep the gains while leaving you with the losses.


It's possible to invest in cryptos responsibly, just as it's possible to invest in stocks incredibly irresponsibly. All in all it just comes down to proper risk management and investing sanely.

[Rengga Jati]

Bitcoin is NOT a replacement to the Stock Market/ traditional investments

I totally agree with this, Bitcoin is not replacing.
But about saying Bitcoin is not an investment, I am still confused and don't know why it is said so.

An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in value at some point in the future.

What about this?
We put our funds in Bitcoin and hold it as an investment for a certain period for the sake of getting more income or profits in the future. I think this is also one of the investments.
But well yeah, once again, the definition may be different for each person here.

Source: https://www.investopedia.com/terms/i/investment.asp

[aesma]

In my country the vast majority of people aren't invested in stocks. At best they're in life insurance with some stock exposure.

The reason being people want safe investments, nothing that can go down.

So if these people own some BTC, it's kind of an improvement. They might go from BTC to stocks !

[Vaskiy]

So why do you think Bitcoin has value? Bitcoin keeps growing because it has key fundamentals that fiat will never have because unlike fiat, it cannot be used for massive printing causing hyperinflation. For now, fiat can be useful but someday it won't. Due to depreciation while bitcoin will gain more higher prices cause its limited, scarce and have much superior technology.

The increased demand and the limited supply is the reason for the rise in the value of bitcoin. The value of bitcoin will grow with time, bitcoin isn't an investment. The core reason for which its been developed is different, but things changed in between due to its tremendous growth. This has made people prioritise it aas an investment.