Should Crypto Be Treated As Tech Stock?

News, Opinion | October 20, 2020 By:

Cryptocurrency is a hot topic. The stock values of these currencies, especially, are often debatable, since they fluctuate somewhat dramatically. However, a recent surge for Bitcoin’s value has experts and investors curious about how to treat these crypto stocks. Regarding them alongside tech companies like Apple and Google could be the way forward for the field.

At the beginning of September, Bitcoin reached a peak of over $12,000 on the stock market — a feat the cryptocurrency hasn’t achieved since 2019. The peak comes after a drastic drop in March of this year down to the $5,000 range. The September rebound has experts curious about how to consider not just Bitcoin’s value, but cryptocurrencies as a whole.

Throughout the pandemic, tech stocks have been doing well. The reliance on technology and e-commerce during quarantines and social distancing has companies like Apple, Google, Amazon and Facebook surging ahead in the market. With Bitcoin’s sustained growth since July, investors are now wondering if they can consider cryptocurrencies alongside these big tech stocks.

Of course, this kind of consideration comes with benefits and drawbacks that will affect how people choose to invest.

Benefits of Crypto as Tech Stock

Bitcoin first emerged in 2009 and was relatively flat until 2017, when it started to take off. It reached a peak value of around $20,000 at the very end of 2017. Throughout 2019 and 2020, the stock has typically stayed around $10,000. So far, these numbers signify that Bitcoin has outperformed other big tech companies like Google and Facebook.

Investors and experts often compare Bitcoin to gold. Both investments come with changes in values at somewhat sporadic times. However, Bitcoin has proven to be more than a monetary asset. It has ties to an entire industry of crypto-based technology, like the blockchain network it runs on. Seeing how tech companies constantly innovate, Bitcoin seems to fall more under a tech category than comparisons to gold would seem to indicate.

To bring crypto, as a whole, to the same standards of tech stocks could be a way forward for digital currencies. It could draw in more investors who feel that crypto is an asset rather than something they should shy away from. This consideration could ultimately standardize Bitcoin and other currencies as a common form of money and transactions.

Plus, if Bitcoin continues on its path, it could expand upon its potential. The record high value of around $20,000 could soon be a record that the stock breaks. More investments could further stabilize the ups and downs of crypto values. However, there are still concerns when considering cryptocurrencies this way.

Drawbacks of Crypto as Tech Stock

Crypto stocks have a reputation for being volatile. One day they may reach a new record and the next they can drop to a drastic low point. In terms of considering crypto as a tech stock, this volatility is the number one obstacle that makes investors hesitant.

People want to invest in stock they can rely on — and stocks like Bitcoin can’t always guarantee that. Some investors believe that although cryptocurrency has potential, it is a relatively unsafe investment mechanism. While big tech stocks will, of course, fluctuate, the drops aren’t as drastic as crypto values.

Furthermore, the IRS considers cryptocurrencies to be property instead of value. This taxation classification can be a hindrance to establishing currencies like Bitcoin as a valid source of money or income. Depending on how investors want to treat their crypto stocks, the IRS’ consideration could be another setback.

Additionally, Bitcoin is not the only cryptocurrency on the market. Ethereum is another popular choice, but it has run into some trouble lately. The digital fund has faced multiple 51% attacks where miners collect over a majority of a blockchain network’s computing power, taking away resources from other investors.

To establish cryptocurrencies as a tech stock, attacks and instability will need to decrease substantially.

Crypto Considerations

With such high levels of attention constantly on cryptocurrency, there’s always going to be debate around it. Discussing how to consider crypto, though, is of the utmost importance. It will influence how and when investors choose to buy and sell, paving the way for crypto’s future.