Anytime one compares two, separate entities in a competitive fashion, there is usually a strong favorite and risky underdog. This logic is especially true when comparing cryptocurrency vs a mutual fund. One, the longstanding favorite of expert investors. The other, a new, volatile craze that's sweeping the nation. So which one will stand the test of time? More importantly, which one should you invest in?
Before we go into comparing the two, let's do a little background information. Most of you probably know what cryptocurrency is but let's discuss it anyway. Crypto is simply lines of computer code that have some sort of monetary value. Most governments don't have control over who creates these digital currencies which is what makes them so attractive to the majority of society. It's no coincidence that Bitcoin was the first crypto to come out in 2009, just one year after the 2008 financial crisis. All in all, it attempts to create a decentralized currency that the general public has more control over.
For cryptocurrency, the main risk is the unstable market. Investing in something like Bitcoin could make you incredibly wealthy in a matter of weeks or broke in a fraction of a second. Look at Ethereum for example. In 2017, the price of ETH rose from $40 to $400 in a short period of time. Now, it's down to $200. Until Blockchain technology becomes more mainstream, then crypto will continue its volatile ways.
Mutual funds, on the other hand, are far more reliable. For the most part, we all know who is in charge of mutual funds and we get to see the Net Asset Value (NAV) of a given fund on a daily basis. This sort of consistent information helps us decide whether to stay with this mutual fund or withdraw our money.
The moment of truth is here. For those looking for one, quick answer that will solve all your problems, sorry. Investing doesn't work like that. The truth is both cryptocurrency and mutual funds can be good or bad investments. It all comes down to knowledge. There are plenty of stable, good investments in the cryptocurrency world. Alternatively, there are some incredibly high-risk ones.
Mutual funds, on the other hand, will probably provide with some long-term, stable returns in the future. You won't exactly be changing the world with a mutual fund investment but maybe that's what you want. In the end, it comes down to your, your mind and your investment style. Of course, this is just one person's opinion. As always, it helps to do your own research on the matter and keep an open mind to suggestions.