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Wealth Building Strategies: Bitcoin or Stocks?

Wealth Building Strategies: Bitcoin or Stocks?
Wealth Building Strategies: Bitcoin or Stocks?

Optimal investment path unveiled.

Bitcoin and stocks are two prominent investment options with unique features and potential returns. Understanding the differences between these assets is crucial for making informed investment decisions.

So, without further ado, we’ll delve into the characteristics of Bitcoin and stocks, their market perspectives, adoption rates, advantages, and disadvantages.

Understanding Stocks and Bitcoin

For centuries, stocks have remained a cornerstone of investment. Originating around 1600 with The Dutch East India Co. as the first publicly traded company. Stocks signify ownership in a company, allowing investors to partake in its growth and earnings.

Consider owning Apple shares: with 100 lots, you possess 0.00006% of the 15.5 billion outstanding shares, entitling you to dividends and capital gains as the company thrives.

Contrastingly, Bitcoin emerged in 2009 as a digital currency created by an anonymous entity known as Satoshi Nakamoto. Investing in Bitcoin means acquiring digital currency devoid of physical form.

Bitcoin’s allure lies in its scarcity — capped at 21 million coins — and decentralised structure, positioning it as a hedge against economic uncertainty and inflation.

Despite being relatively new compared to stocks, Bitcoin and other crypto have witnessed remarkable adoption. The global crypto market capitalisation exceeded US$2.35 trillion in mid-April 2024, with Bitcoin commanding a substantial portion at US$1.27 trillion.

Moreover, the proliferation of Bitcoin wallets, numbering around 460 million, underscores its growing significance.

Bitcoin's Price is Rising
Bitcoin’s Price is Rising
Why Bitcoin?

It doesn’t imply that stocks are inferior, as every investment vehicle has pros and cons. However, in this article, we’ll delve into the advantages of Bitcoin over stocks.

Modes of Operation

Despite their differences, stocks, and Bitcoin share several similarities:

  1. Supply and demand are pivotal factors influencing both stock prices and Bitcoin.

However, while stock supply and demand are affected by acquisitions, mergers, and dividends, crypto’s dynamics are shaped by its increasing recognition and utilisation.

For instance, when companies like Tesla, MicroStrategy, and Square adopted Bitcoin as part of their treasury reserve, its price soared to unprecedented heights.

  1. Capital gains, or the profit derived from the difference between buying and selling prices, are a standard means of generating returns from stocks and Bitcoin.

However, they aren’t the sole methods. Stock investments yield dividends, while Bitcoin offers additional avenues for profit, such as staking and mining activities.

  1. Optimal returns, both stocks and Bitcoin offer the potential for significant profits, albeit with equally substantial risks.

However, crypto has the potential for returns far exceeding stocks. In the Indonesian stock market, there’s a maximum increase limit, known as auto rejection, set by the Indonesia Stock Exchange.

For instance, stocks priced above IDR 5,000 are subject to a maximum daily increase of 20%. Any movement beyond this threshold triggers an automatic rejection by the system.

This limitation doesn’t apply to Bitcoin. Your investment’s value will skyrocket accordingly, even if its price surges by 100% or more daily.

Asset Utility

As Bitcoin’s utility expands globally, it transcends its role solely as an investment asset. While Bitcoin may still be primarily viewed as an investment tool in Indonesia, its acceptance as a means of payment is rapidly increasing worldwide.

Bitcoin facilitates transactions on major global e-commerce platforms like eBay, Amazon, and PayPal. With PayPal alone, Bitcoin holders can shop at 26 million merchants. Such utility does not apply to stocks. Stocks need to have the versatility of serving as a medium of exchange, but they hold value as inheritances or dowries in cultural contexts.

Borderless Transactions and Accessibility

Unlike traditional stock markets with set operating hours, Bitcoin operates 24/7, offering unparalleled accessibility and flexibility. Stock market transactions are confined to specific business days and hours, limiting liquidity and transaction opportunities. Typically, it takes about three business days to convert stocks into fiat currency.

In contrast, the crypto realm knows no temporal or geographical boundaries. With Bitcoin, transactions are instantaneous and location-independent. Whether buying, selling, or transferring assets, Bitcoin transactions occur in real-time, facilitated by blockchain technology’s transparent and immutable nature.

Take note, investing is not a get-rich-quick scheme or a shortcut to wealth. It’s a disciplined approach to saving, preserving the value of money, and growing wealth over time.

Approach investments with careful consideration and a mature mindset. Take the time to analyse a company’s financial reports thoroughly if you’re investing in stocks. For crypto, understand the purpose, utility, technology, and background of the coin you’re interested in.

Above all, tailor your investments to your financial situation, objectives, and risk tolerance. It’s crucial to reassess and adjust your investment strategy accordingly regularly.

Buy Bitcoin with Ease on Luno
Buy Bitcoin with Ease on Luno
Buy Bitcoin with Ease on Luno

Why Luno? Operating in over 40 countries, including Indonesia, Luno offers an easy experience for buying and exploring Bitcoin and other crypto.

  • Excellent: Luno prioritises quality coins, ensuring a transparent and trustworthy investment journey. Our customer service team is available in Indonesian and English if you need assistance.
  • Affordable: Luno’s user-friendly app makes it easy for beginners to start investing. You can begin buying coins with as little as Rp25,000 quickly and hassle-free.
  • Secure: By registered and supervised under BAPPEBTI – Commodity Futures Trading Regulatory Agency, Luno ensures a safe platform. Additionally, our in-app security features can keep you safe.
  • Yielding: Use Luno’s repeat buy option to invest in coins regularly, whether daily, weekly, or monthly. This strategy promotes long-term profitability and consistency in your investment approach.

Download Luno from the App Store or Google Play Store to kickstart your crypto investment journey. You can use INDOEXPAT promo code to get free Bitcoin worth Rp100,000 while registering on Luno.

Luno is registered and supervised by the Commodity Futures Trading Regulatory Agency (Bappebti). Trading and investing in crypto assets is a high-risk activity. Read more on our Terms of Use here: www.luno.com.

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