Cryptocurrency – this is an opinion piece
Let me start with – I’m not a fan.
I know that’s an unpopular opinion, a lot of my friends are making money in cryptocurrency, but I just can’t wrap my head around the concept. That’s not because it’s new, I’ve been studying it for five years.
I understand the concept of blockchain, which is supposed to be the basis for crypto. I even understand the concept of mining. If you don’t – that’s ok – but I believe that cryptocurrency only has value because people value it. Like diamonds or unicorn feathers – it’s rare, so, therefore, must be of value.
In today’s market, cryptocurrency is pure speculation.
There’s money to be made, but the risks are significant too.
In 2018, several people I knew mortgaged their homes to invest in crypto. I listen to people who purchased Dogecoin because everyone on Robinhood was. Anytime you follow the crowd and don’t think for yourself, you aren’t using the Money Tools available to you.
So here’s my recommendation. Stay out of cryptocurrency as an investment.
If you want to put a few dollars there as play money, do it. Liken it to buying lottery tickets or playing the tables in Vegas; it’s gambling, not investment. As a strategy to manage money, there is still too much risk involved.
Here are the risks as I see them:
- Crypto is not regulated.
I’m not a big fan of government regulation, but anytime we’re talking about money, someone has to be in charge. Not having it regulated allows the swindlers and the conmen to be in control. Recently a pair of brothers in Africa swiped all the coin from an exchange they set up, valued at $3.6 billion. Greed is a powerful thing.
- If you lose your password, or forget it, or get hacked, your cryptowallet is gone. There are no special safeguards like almost every other website, or app we use has to recover a password. Your coin is attached to a wallet that is entirely under your control. Lost, and it’s gone forever. I’m not that good at keeping my life organized enough never to forget something.
- There is no hard asset, there is no business you are investing in like the basis of a stock. Value is at the whim of others around you. I got an email last month from a podcaster who was excited to have set up his own crypto, and I had the opportunity to get paid that way. Again, it’s like unicorn feathers because he thinks it has value; he wants everyone to believe it has value.
I’m not saying it won’t find its way in the market, but today, it’s not for me, and I would ask you to consider it as play money until it’s been better sorted out. You may miss out on an opportunity, but you’ll likely sleep better too.