Hello there! My name is Hamza, and I'm a Curtin University finance student.

You might have heard about Crypto or Non-Fungible Tokens (NFTs) before as they have been gaining popularity recently (Browne, 2022; The Economic Times, 2021). However, what are they? And how are they different from one another? This is what the article will attempt to tackle and answer (in addition to traditional stocks). Lastly, my own thoughts about these assets will be presented.

According to Mäntysaari (2021), a stock is a financial instrument that reflects a percentage of a company's ownership. According to the quantity of stock held, the shareholder receives a portion of the corporation's assets and earnings. With an average annual rate of return of around ~10%, stocks present a great investment opportunity (Royal & O'Shea, 2022).

Crypto is a decentralised digitised form of currency that is governed by no central authority, such as a bank or a government (Mercer, 2021). Cryptocurrency allows individuals to exchange and trade across borders through digital networks (Mercer, 2021). Furthermore, crypto provides a number of advantages (in comparison to traditional banking), including: (1) faster transaction speeds, (2) cheaper transaction costs, (3) ease of accessibility, and (4) anonymity, as well as a slew of additional advantages that will be thoroughly discussed in subsequent blogs (Levy, 2022).

Non-fungible tokens (NFTs) are blockchain-based cryptographic assets featuring unique identifying codes and metadata that differentiate them from one another. Unlike crypto, they cannot be sold or exchanged for equivalents. This differs from fungible tokens, such as cryptos, which are interchangeable and hence may be used as a medium of trade. NFTs represent ownership of an image, video, audio, real life assets, and much more. (Chohan & Pascheb, 2022)

So, where should you put your money? Many factors come into play when answering that question, therefore the answer is not as easy and clear as you may expect. However, I will try my best to make it as simple as possible. Based on your investment horizon as well as your risk tolerance level, the figure below shows the optimal asset to invest in.

You'll notice that for each of the four categories of investments, I mentioned both stocks and crypto. Personally, I believe that crypto and stocks provide excellent investing prospects since they provide a diverse range of asset types to acquire and invest in, satisfying investors of all sorts (Black, 2021). However, I believe that NFTs are to be considered an extremely risky asset to invest in for two main reasons: (1) illiquidity (difficulty of selling your asset after purchasing it), and (2) the prevalent number of scams due to the market's lack of regulation. (Williams, 2021; Hissong, 2022)

In future blogs, I'll go into further detail about why you should invest and how to do so in each of the three assets mentioned.

Black, K. (2021). What Happens If You Add Crypto to a 60/40 Portfolio?. Chartered Alternative Investment Analyst Association. https://caia.org/blog/2021/09/30/what-happens-if-you-add-crypto-6040-portfolio.

Browne, R. (2022). Trading in NFTs spiked 21,000% to more than $17 billion in 2021, report says. CNBC. https://www.cnbc.com/2022/03/10/trading-in-nfts-spiked-21000percent-to-top-17-billion-in-2021-report.html.

Chohan, R, & Pascheb, J. (2021). What marketers need to know about non-fungible tokens (NFTs). Business Horizons Journal, 64(6). https://doi.org/10.1016/j.bushor.2021.12.004.

Hissong, S. (2022). NFT Scams Are Everywhere. Here’s How to Avoid Them. Rolling Stone. https://www.rollingstone.com/culture/culture-features/nft-crypto-scams-how-to-not-get-scammed-1286614/.

Levy, A. (2022). 8 Benefits of Cryptocurrency. The Motley Fool. https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/benefits-of-cryptocurrency/.

Mäntysaari, P. (2021). Stocks for All: People’s Capitalism in the Twenty-First Century. De Gruyter. https://doi.org/10.1515/9783110761108.

Mercer, K. (2021). Crypto. American Water Works Association Journal, 113(10), 1-1. https://doi.org/10.1002/awwa.1818.

Royal, J, & O'Shea, A. (2022). What Is the Average Stock Market Return? NerdWallet. https://www.nerdwallet.com/article/investing/average-stock-market-return#:\~:text=The%20historical%20average%20stock%20market%20return%20is%2010%25&text=When%20investors%20say%20%E2%80%9Cthe%20market,every%20year%20due%20to%20inflation.

The Economic Times. (2021). Cryptocurrency is gaining worldwide acceptance, here are 5 reasons why. Bennett, Coleman & Co. Ltd. – The Economic Times. https://economictimes.indiatimes.com/markets/cryptocurrency/cryptocurrency-is-gaining-worldwide-acceptance-here-are-5-reasons-why/articleshow/87209465.cms.

Williams, R. (2021). The Case for NFT Liquidity Markets. CryptoNewsZ. https://www.cryptonewsz.com/the-case-for-nft-liquidity-markets/.