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Alternatives To Cryptocurrency Trading

Written By

James Barra

Written By

James Barra

James is an investment writer with a background in financial services. He has worked as a management consultant, where he delivered large-scale operational transformational programmes at some of Europe's biggest banks. James authors, edits and fact-checks content for a series of investing websites.

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Edited By

Jemma Grist

Edited By

Jemma Grist

Jemma is a writer, editor and fact-checker focused on retail trading and investing. Jemma brings a unique perspective to the forex, stock, and cryptocurrency markets and works across several investment websites as a researcher and broker analyst.

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Fact Checked By

William Berg

Fact Checked By

William Berg

William contributes to several investment websites, leveraging his experience as a consultant for IPOs in the Nordic market and background providing localization for forex trading software. William has worked as a writer and fact-checker for a long row of financial publications.

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Updated

Jul 24, 2024

Thanks to its 24/7 availability and significant volatility, cryptocurrency is one of the most popular new asset classes. However, many traders still prefer established markets such as stocks or forex as a less volatile way to trade with regulatory oversight and investor protections. At the same time, digital assets such as NFTs provide alternatives to trading cryptocurrency that are still adjacent to the digital currency market.

This tutorial unpacks the best alternatives to cryptocurrency trading, alongside their benefits, drawbacks and key characteristics.

Cryptocurrency Trading Limitations

Crypto trading has taken off since Bitcoin hit the market in 2009, and today many people recognize digital currencies as their own asset class. However, there are several significant downsides to crypto trading that still put many retail investors off:

• Volatility: Crypto markets tend to be highly volatile. Some see this as a benefit, as the extreme price swings can lead to large profits, but they also magnify losses, making cryptocurrency riskier than most other asset classes.
• Limited Regulation: Much of the crypto space is unregulated, meaning that traders and investors have little or no protection if things go south. It is very common for new tokens or crypto projects to pop up and quickly disappear along with investors’ money, but massive exchanges like FTX have also collapsed in recent years.
• Restrictions: Some countries have imposed outright bans on crypto trading, and some have imposed serious restrictions. This makes it harder to find trustworthy crypto firms, while derivatives and margin trading are unavailable in some jurisdictions.
• Security: Although cryptocurrency networks are usually secure, crypto exchanges and customer wallets have experienced hacking and scams in the past. For example, in 2019, hackers stole more than 7000 Bitcoin tokens (worth over $40 million) from Binance wallets alongside breaching two-factor authentication codes and API tokens.

With that in mind, what are the best alternatives to cryptocurrency trading?

Stocks

Trading stocks is a well-established, regulated and generally less-risky alternative to crypto trading. Stock trading has been available to retail traders for decades and there is a huge variety of online brokers and trading products to choose from.

Additionally, traders investing in shares may be entitled to voting rights and access to dividend payments. This provides additional income opportunities and the chance to influence the future performance of the underlying equity.

One difference to cryptocurrencies is that stocks are traded on exchanges that generally have set trading hours. The trading hours depend on the exchange in question but tend to be close to typical weekday working hours in the exchange’s native time zone. Some exchanges and stock brokers also support pre-market and after-hours trading.

Publicly traded companies are required to maintain a level of transparency for stakeholders. This may be in the form of financial publications or annual shareholder meetings. This, alongside access to extensive historical data, can make it easier to use fundamental and technical analysis when trading shares.

Forex

Trading forex is the transaction of exchanging one national currency for another. Currencies trade against each other as exchange rate pairs. Cryptocurrencies follow a less formal structure than forex, making the market more susceptible to criminal activity or fraudulent transactions. Although both have a decentralized structure, with no single party controlling the market, forex trading is regulated, and is thus often deemed a more secure alternative to cryptocurrency investing.

The forex trading experience depends largely on the currencies you trade. Major pairs like Euro–Dollar (EUR/USD) or Pound Sterling–Dollar (GBP/USD) tend to be more stable, while pairs with exotic currencies, such as Dollar–Turkish Lira (USD/TRY) are usually more volatile.

A key advantage of forex trading is the widespread availability of derivative products with margin trading. Even in jurisdictions with tighter controls on the retail market, forex tends to be an asset class with a higher level of leverage available.

Regulations play an important part in the forex market with some of the most respected institutions including the FCA, CySEC, and ASIC monitoring the marketplace. Registered broker-dealers must provide retail investors with negative balance protection and maximum leverage limits for financial safeguarding.

Many countries worldwide are still developing regulations specific to the crypto market. Without this oversight, digital currencies pose more of a significant risk of financial loss than forex.

Commodities

Natural resources such as oil, iron and gold, and agricultural products or livestock including wheat and corn are widely available to trade on commodities markets.

Retail traders can access commodities on many trustworthy and regulated online brokers, making this one of the more secure and reliable alternatives to cryptocurrency trading.

There are a lot of assets available to commodities traders, and many experience high volatility. They may not reach the levels of volatility found in crypto markets, but the tradeoff is that it is easier to find a regulated commodities broker. Many of these brokers also offer derivative products with leverage, such as CFDs.

NFTs

Another alternative to cryptocurrency trading is NFTs. Non-fungible tokens are unique digital identifiers that cannot be copied, substituted, or subdivided, and are recorded on a blockchain in the same way as a cryptocurrency.

NFTs can essentially be any digital item such as an art piece, sports memorabilia, or music. As an example, Twitter founder Jack Dorsey sold an NFT of his first tweet for more than $2.9 million. Customers can purchase NFTs via an online marketplace such as Nifty Gateway.

While NFTs are not traded at brokers in the same way as cryptos and other assets, they can be alternatives to trading cryptocurrency for people with an artistic bent. The value of an NFT is based on its individual merits in the same way as artwork, and NFTs from the most popular projects such as Crypto Punks and Bored Apes Yacht Club have sold for tens of millions of dollars.

When it comes to NFTs being a more secure alternative to cryptocurrency, there is no right or wrong. Non-fungible tokens use the same blockchain technology as cryptocurrency meaning they are difficult to hack, though not impossible. The software that stores the keys can be hacked, and the devices you hold the keys on can be lost or destroyed so it may not be a safer alternative to cryptocurrency in this sense.

NFT Trading Platforms

Review

Nifty Gateway is a leading online marketplace for NFT trading, offering a range of tokens with low fees.

Nifty Gateway is a leading online marketplace for NFT trading, offering a range of tokens with low fees.

Review

Buy and sell an extensive collection of digital tokens secured using crypto blockchain technology.

Buy and sell an extensive collection of digital tokens secured using crypto blockchain technology.

Review

OpenSea is a popular NFT trading platform offering a range of tokens with multiple payment options.

OpenSea is a popular NFT trading platform offering a range of tokens with multiple payment options.

Crypto Mining

Crypto mining is one of the top alternatives to cryptocurrency trading for those with access to powerful computer hardware. In return for contributing processing power, miners in the network are rewarded with newly minted coins. For Bitcoin and some other cryptos, the process involves deducing a 64-digit hexadecimal number known as a hash. The faster a computer creates the correct code, the more likely the miner is to earn the reward.

Despite the process seeming simple – lending computer power in return for cryptocurrency, in reality, isn’t easy. Plenty of equipment, time, and resources are required to become profitable, with any serious mining operation involving a large initial outlay to buy the equipment followed by high energy bills to power it.

Brands such as StormGain offer mining through its crypto app, but the potential gains are unlikely to make it a viable alternative to cryptocurrency trading for many retail traders and investors.

ETFs

ETFs, or exchange-traded funds, can be a good option for traders who are interested in crypto but don’t want to trade it directly. Traders can pick up an ETF like the Bitwise 10 Crypto Index Fund that invests directly in large market cap cryptos, or they can choose one that focuses on companies involved in blockchain technology or crypto mining.

Crypto ETFs can be a good alternative to directly trading crypto, but be aware that you may pay a premium compared to investing directly in the currencies.

Should You Consider Alternatives To Cryptocurrency Trading?

The significant volatility and risk inherent in the crypto market are common reasons why many individuals seek alternatives to cryptocurrency trading. Stocks, forex and other assets provide a much more stable investment opportunity with regulatory oversight and more data transparency to aid trading decisions.

FAQ

Is Stock Trading A Better Alternative To Crypto Investments?

There is no right or wrong trading product – it comes down to personal preference. Trading stocks, however, is typically a less volatile market than crypto, with fewer price swings and increased market transparency. Direct share dealing may also afford traders dividend payments.

Are NFTs A Safer Alternative To Crypto?

NFTs are relatively secure in that transactions are processed via blockchain technology and stored in offline wallets. However, this is more or less the same process as cryptocurrency, meaning NFT traders are vulnerable to the same security threats such as hacking, which also affects cryptocurrencies. Additionally, like cryptocurrencies there is no real asset backing up the value of an NFT, meaning it may be subject to extreme price movements. As a result, NFTs are not a safer alternative to crypto.

Is Crypto Mining A Good Alternative To Crypto Trading?

Crypto mining can be one of the good alternatives to cryptocurrency trading. Having said this, the initial investment required to get started with crypto mining is significant, and the ongoing outlays for energy will also be high. Moreover, the crypto you mine will still be subject to the same volatility as the rest of the market, meaning that your mining profits could suffer if the market takes a dive.

What Are The Best Cryptocurrency Trading Alternatives?

There are many trading products available as alternatives to cryptocurrencies. Consider stocks or forex for more stable trading opportunities that have regulatory oversight. Crypto mining is another alternative to trading digital currency coins that allow the investor to benefit from rewards by providing computing power and processing time to generate new tokens. For a relatively risky alternative, NFTs are popular with some retail traders.

What Are The Best Alternatives To Trading Cryptos Such As Bitcoin Or Ethereum?

Consider investing in the forex or stock market for a less volatile trading environment. Blue-chip stocks, for example, may be better for longer-term, more stable investments without needing constant monitoring. Alternatively, major, minor and exotic currencies, plus commodities and some stocks, offer plenty of short-term trading opportunities.