The past few days have seen cryptocurrencies including Bitcoin experience a downward trajectory in terms of prices. This has led many to question just how reliable they can be as a store of value for investors. Despite the current decline in prices, many remain hopeful that cryptocurrency prices will eventually make an upward climb. However, this article explores why you should invest in cannabis stocks as a more reliable alternative to Bitcoin and other cryptocurrencies.
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This post does not hope to take away the merits of investments in cryptocurrencies, but to highlight how marijuana stocks can be more reliable for storing value.
Justification for Usage And Investment in Cryptocurrencies or Cannabis Stocks
In terms of justification, ownership of cannabis stocks essentially translates into ownership of a company. However, ownership of cryptocurrency typically reflects owning a means of exchange that can be relatively more valuable than others. For instance, while ownership of cannabis stocks can confer voting rights to a shareholder, owners of Bitcoin do not share similar privileges.
Also, large exchange providers like Coinbase and Binance have made cryptocurrencies such as Bitcoin more acceptable or tradeable globally. This isn’t the case when you attempt to invest in cannabis stocks. For instance, Robinhood which is a popular stock trading platform among millennials only accepts traders with U.S. residency. So, in terms of global acceptance and usage, cryptocurrencies come out top.
Which is a Better Investment? Cannabis Stocks vs Cryptocurrency
The following explores which of these options is a better investment across different areas.
Regulation
Cryptocurrencies like Bitcoin and Dogecoin thrive for their lack of regulation. While the underlying technologies behind them are usually admired, the lack of a regulatory framework guiding them could potentially lead to problems for investors. Also, it has meant a lot of cryptocurrencies without purpose have been created over time. For instance, Dogecoin which experienced immense growth over the past few months is based on a meme.
However, cannabis stocks are generally guided by strict regulations. From listing on exchanges like the NASDAQ and NYSE to remaining on them, cannabis stocks have to meet specific requirements. These requirements generally attest to how well the businesses are being run. Even stocks that are traded over the counter are still somewhat regulated.
Price Volatility
If there’s anything the past week has shown with cryptocurrencies, it’s that you can make fortunes or lose them within the shortest time frame. While the same can be said about some cannabis stocks, they generally display less volatility with their pricing.
Response to External Factors
As soon as China announced it was cracking down on cryptocurrencies, the industry panicked and prices started to crash. Throw in the comments from Tech billionaire Elon Musk about his lack of confidence in the energy consumed in processing Bitcoin transactions and the industry was further thrown into a frantic mode. While marijuana stocks also respond to events in the industry, it’s certainly less damaging as investors always consider additional factors like how well the businesses are being run. For instance, news of marijuana legalization usually triggers an increase in weed stock prices.
Transaction Fees
While cryptocurrencies are originally designed to reduce transaction costs overall, the initial costs associated with buying and sending Bitcoin far outweigh the expected costs when you invest in cannabis stocks.
Profitability
Trading in both cannabis stocks and cryptocurrencies can be very profitable. However, when you factor in the price volatility of cryptocurrencies, the ownership privileges from buying cannabis stocks, and the trust that comes from regulation of the stock market, cannabis stocks can offer more sustainable profitability in the long term.
Closing Thoughts: Should You Invest in Cannabis Stocks or Cryptocurrency?
Whether you’re making short-term trades or buying for the long term, cryptocurrencies like Bitcoin and Ethereum offer decent investment opportunities. However, while both investments in cryptocurrency and cannabis stocks offer vast rewards, they can also lead to massive losses. Like any other investment decisions, buying cannabis stocks or cryptocurrencies should be with the right understanding. Click here for a detailed guide on how to invest in cannabis stocks.
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