Bitcoin and Cryptocurrencies as Alternative to Stocks Investing

Dear Reader,

Is Bitcoin and cryptocurrencies investing an alternative to investing in stocks of listed companies?

The short answer, as far as I am concerned, is no. Bitcoin and cryptocurrencies are currently and potentially much more volatile than company stocks. Bitcoin's volatility is similar to the volatility of micro capitalization stocks or companies with stock market capitalization of between 50 million USD and 300 million USD.

What is more, Bitcoin and cryptocurrencies are not shares of a company, unlike stocks. Which means Bitcoin and cryptocurrencies do not participate in the estate of the company and are not entitled to a share of the proceeds if company's assets are liquidated in case of bankruptcy.

What is more, Bitcoin and cryptocurrencies do not have inherent cash flows which translate usually into net profits to back them, different to stocks of companies which are legal entities.

The US Securities and Exchange Commission interprets Bitcoin and cryptocurrencies as commodities. 

Bitcoin and cryptocurrencies usually serve as a payments infrastructure or tokens coupled with a particular projects of a company. In that way they are driven by most of the factors that drive stocks.

However, the aforementioned differences do create higher inherent risks in investing in Bitcoin and cryptocurrencies than investing in company stocks.

In short, investing in Bitcoin and cryptocurrencies entails much higher risks than investing in the stocks of listed companies.

The rewards, however, especially from investing in relatively obscure cryptocurrencies can be potentially much greater.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich