The most famous and popular cryptocurrency is following a strong 2016 with an incredible start to 2017, leading many to wonder if traditional capital markets will face continued disruption from this new technology. Given that bitcoin was the top-performing currency of 2016, many are now starting to wonder if it would be better to invest in this currency of the future over traditional stocks. While both the stock market and bitcoin exchanges have their positives and negatives, it’s important for those thinking about their financial futures to look at the big picture when determining the right step for themselves.
Stock Market Has Cost Investors Trillions Before
The financial crisis that happened from 2007 to 2009 was a tremendous shock to everyone and created serious pain for investors. During the crisis, $11 trillion was lost in the US stock market, and $3.4 trillion was lost in retirement accounts for Americans.
Those numbers paint a grim picture of the dangers of investing in the stock market. During the prosperous years of the 1990s and early 2000s, people felt safe investing in stocks. This was the way to be prepared for retirement and life after work. The shockwaves felt after the crisis are still reverberating, leading many to look for new ways to invest their money and plan for the future. Even though American stock markets are now at record highs, the memories of the Great Recession and the disastrous results for investors has many looking for more stability going forward.
Bitcoin Volatility
Though stock markets have well-documented instances of volatility, bitcoin has its own history of extreme highs and lows during its brief existence. While the cryptocurrency has been reported as the best performing currency in three of the last four years, the other year it was worst.
These extremes are sure to give potential investors cause for concern. People are looking for stability, especially as it relates to retirement accounts, want to know that they aren’t going to lose everything overnight. This kind of rapid fluctuation in value is worrisome to these investors for a good reason. Many of them have been through this before, given the losses suffered in the Great Recession. Jumping headfirst into a new and still changing market isn’t necessarily appealing, especially given concerns that are still out there regarding the security of the online currency.
Bitcoin Exchanges Easy To Use, Increasing Security Measures
While most investments in stocks are done through brokers or firms who handle transactions, bitcoin exchanges offer investors the chance to be hands-on with their investments. The exchanges often feature easy to understand terms and fee schedules. The ability for average investors to take control of their own investments is a benefit to bitcoin exchanges over traditional stock markets. Those who want to know how their investment is holding up on a regular basis without using a third-party, such as a broker or investment firm, will find bitcoin exchanges a nice change of pace. This is important for investors still uneasy following the 2009 financial crisis.
Many bitcoin exchanges have also made efforts to improve their security features. This includes everything from a multi-step identity verification process to refusing to accept PayPal payments for bitcoins, preventing people from getting the currency for free by canceling a payment on PayPal’s network after a purchase on the exchange.
Bitcoins High-risk, High-reward Future For Investors
Stock markets are still riding high, but as history tells us, will see another decline. The continued ups-and-downs of traditional stocks are guaranteed to lead to global panic and massive losses in the future. While bitcoins aren’t a surefire bet, given their volatility, it is a growing market with the potential for growth beyond anything we’ve seen before. The new year has brought about good news for the growing cryptocurrency, following a strong showing in 2016. Continued growth throughout the year will make bitcoin an attractive investment opportunity for those looking to move away from the stock market for years to come.
