Cryptocurrency is a digital or virtual currency that uses cryptography for security, whereas traditional investments like stocks and bonds represent ownership in companies or loans to them. For example, if you invest $1,000 in a stock, you own a piece of that company and can benefit from its profits. In contrast, when you buy $1,000 in Bitcoin, you hold a form of currency that can fluctuate wildly in value. If Bitcoin goes from $10,000 to $20,000, you could double your investment, but it could also drop to $5,000, leaving you with significant losses. Understanding these differences in volatility is essential for making investment decisions.

Volatility refers to the degree of variation in the price of a financial instrument over time. High volatility means that the price of an asset can change dramatically in a short period, which can lead to larger gains or losses. In contrast, low volatility indicates that an asset's price is stable and tends to fluctuate less, resulting in more predictable returns.