It’s always good to jump on bandwagons, it’s my favourite thing to do.
It’s so easy to get caught up into the hype, and something fresh and new is always fun to get involved in. Add onto that you have the potential to make lots of money, it’s a perfect recipe for irrational decisions.
Enter Crypto.
Have you ever Googled what crypto is in simple terms?
It’s bonkers to get your head around, but I’ll try and give it a crack.
Crypto is any form of currency that exists digitally or virtually and uses cryptography to secure transactions.
Cryptocurrencies don't have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new unit.
You generate more crypto currency through a process known as mining.
It entails massive, decentralised networks of computers all over the world that verify and safeguard blockchains, which are virtual ledgers that record crypto transactions.
Glad we cleared all that up.
Years ago at work during some training and presentations an expert in the field explained that: “if you can’t explain your idea on one slide and one sentence – you don’t understand it”.
This is so true. Think of times when you have been trying to blag something at work to your boss on a topic you don’t really understand. You ramble on for longer than you should, you make it more complicated than you need to, and the majority of people don’t understand it.
Now I am not suggesting that because the majority of people don’t understand something that it isn’t true, or isn’t beneficial. Rocket science and brain surgery are two examples that work perfectly that the elite few in the world only need to understand it. But I have a sneaky suspicion that the majority of Crypto investors don’t truly understand what it is, and what is going on.
This makes something which is already quite volatile, even more volatile.
Which is a great lead into crypto currency risk.
For full transparency I have low level risk when it comes to finance. I don’t have the capital available to be risky, and my appetite for risk I would predict will always be low.
You can also take my bias with the information below with a pinch of salt, because similar to any dip with a traditional commodity of an index tracker, if you zoom out and look long term there is overall growth.
But the fluctuation and dips that crypto currency undergoes is way too stressful for me. Losing 70 % of your portfolio over a 7 month period, and 15% overnight is not for me.
Finally, what the hell do you do with it?
You’ve understood it, you’ve seen it grow and now when you come to use it, it’s either not accepted anywhere or you can’t withdraw your funds from the platform you use .
Circle and BlockFI are both examples of platforms holding crypto not able to pay out it’s investors, and their money being tied up, and with Celcius filing for bankruptcy all within a few weeks - it hardly offers much confidence in crypto platforms. Are the anomaly or is this a sign of things to come?
Will the link to fraud and criminals cause more platforms to shut down? Although hard cash and traditional commodities have always been the allure of criminals so perhaps this shouldn’t be a point against it. Gold and hard cash have always been used in the illegal drug industry.
I don’t buy into the idea that Bitcoin, or any other crypto, will be used alongside traditional currencies in the future. So you are always going to trade the Bitcoin you bought and that grew, into dollars and pounds to spend. So if people are buying these coins to develop, to then sell them off, and they offer no other purpose, what value are people gaining from this? Compared to Gold or Silver, which people can actually use for jewellery or in tech, and a limit in their supply will increase their value as less people will be able to make a fancy gold necklace. I can’t see of any purpose or value to crypto.
Saying all this, I do believe that if you bought crypto at the start or anytime pre-summer 2021, and have since sold it, you are winning. And the profit in Dollars or Pounds you have made by cashing-in is amazing. But I do believe that ship has sailed.
The value or purpose of crypto won’t amount to anything, as companies world wide will not accept this as a stable currency in the future. Even though some places do now, I predict this will reduce and change in the future .
What are your thoughts?
What literature or videos should I watch to change my mind?
Is my belief it’s snake blood accurate or am I being a pessimist old fart?
I am open to be swayed and want to be converted - help me learn!
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