Cryptocurrency is all the rage right now.
But is crypto a smart investment?
Is it something everyone should be putting their money into?
Will the “crypto craze” last, or will it burst like a bubble?
Here are my thoughts on whether it’s worth investing in cryptocurrency right now (hint: it’s not for everyone).
It’s Okay to Ignore the Media Pushback
The media doesn’t seem to be much of a fan of cryptocurrencies. They claim that terrorists and dangerous people use crypto, so the everyday person would be unwise to mine or invest.
Subtly, or overtly, they plant doubt in our minds.
Well, if it wasn’t clear from the title, this is an opinion piece, and my opinion is that if you’re interested in getting into crypto, you should ignore what the media says altogether.
To be fair, there are a lot of unknowns with regards to crypto, and the average person doesn’t have a working knowledge of it. So, some fear and doubt are par for the course.
This should not deter you from doing your own research or asking questions though.
As with any opportunity, it simply depends on the person, what they’re looking to accomplish, and what they do with it. We shouldn’t paint everyone that’s interested in crypto with the same brush.
Meaning – there will be crypto successes (as there already have been), and there will be crypto failures (as there already have been).
Whether to pursue the opportunity is up to you, and your results will largely be determined by your approach.
You can listen to the media if you want. Just don’t let them sway you too heavily.
Crypto isn’t an Investment Vehicle
Yes, right now crypto is an investment vehicle. But in the past, it wasn’t, and in the future, it probably won’t be either.
Presently, there’s a growing interest in crypto, mainly because trust in the media and politicians is at an all-time low. Additionally, the fiat currency supply keeps increasing (because the government is printing more and more), which lowers its value.
Once the crypto bubble bursts (more on this later), investors will begin to lose interest in it, especially coins that have no utility. At that point, they will also be looking to trade and spend what they’ve accumulated.
It’s okay to view crypto as an investment opportunity right now. But it’s not like the stock market (which is also speculative), nor will it ever be.
And while some people are day trading crypto, I don’t recommend that, because as with any investment, your best strategy is to play the long game. Buy low and sell high.
Not All Crypto Has Utility
The prime example is Dogecoin.
As NASDAQ says:
- There is a cap on Bitcoin supply. There is no cap on Dogecoin.
- Ether and XRP underpin decentralized networks and cross-border settlements. Dogecoin has no utility or purpose.
Which means this. Dogecoin is little more than an investment vehicle, until it isn’t.
If you own Dogecoin, then you’ve seen its value skyrocket in the last four months (especially in April and May).
But if I owned any Dogecoin, I would be keeping a close eye on its value and sell while its high.
Since it has no inherent utility or value, and investments are emotionally driven, its value could plummet just as fast as it has risen.
With Bitcoin, Ether, and others, you know there will always be utility beyond investment. But some crypto doesn’t. If you’re planning to invest, this is critical to know. Know your coins.
Don’t Use Money You Would Miss Not Having
Cryptocurrency is speculative.
Some people believe it can be used to protect against the inevitable devaluing of fiat currencies and the coming financial crisis.
Two years ago, The Washington Post reported that three out of four economists predicted a U.S. recession by 2021.
Now, I’m not so sure if it’s going to unfold this year, but I do think it will come to fruition in the next two to five years.
So, a lot of people are looking to protect their wealth, and some are looking to crypto as the solution. But it would still be unwise to store all your money in crypto.
By no means should you look at crypto investing as a “sure thing.” It’s not.
As with any kind of aggressive investing, only play with money you’re willing to lose. It would be unadvisable to put your entire fortune and retirement savings into crypto.
The Crypto Bubble Will Burst
I believe interest in cryptocurrencies will only continue to grow in the coming months. That said, I don’t have a crystal ball, and neither does anyone else.
This bubble will eventually burst, and that moment might be coming sooner than most think.
Currently, along with crypto, there is a growing interest in non-fungible tokens (NFTs), and my personal prediction is that people will begin to lose interest in crypto the moment they realize NFT shopping is a lot like eBay before the novelty of buying random junk online started wearing off.
Based on data provided by Google Trends, eBay’s peak was in November and December 2008. Since then, interest has mostly trended downwards.
NFT hasn’t reached its peak yet, and neither has crypto, but that moment is certainly coming.
So, if you’re thinking about investing, know when to get out, because when people lose interest in crypto, it might not be worth putting your money into it anymore.
Don’t Forget – There Are Other Ways to Get Crypto
Buying crypto is not the only way to acquire it.
For instance, I have over 300 LBRY Coin (LBC). I didn’t buy any of it.
There’s an alternative video sharing site called Odysee (originally LBRY), and it works a lot like YouTube.
The main difference is that small actions like confirming your email address, watching videos, and inviting friends to the platform can help you earn LBC from the moment you start your account.
LBC has some utility, at least as applied to Odysee, as you can increase the exposure of your videos by putting more LBC behind them.
Similarly, completing small actions can help you earn a variety of crypto on different platforms. This is known as crypto mining.
Mining itself can cost some money, as you generally need top of the line gaming computers to do it well. That said, as a hobby, it can pay off.
So, is it worth investing in crypto?
It mostly depends on you and your tolerance for risk.
One thing I know for sure is that it’s not for everybody. I have a friend who is averse to it, mostly because he’s had it explained to him multiple times and still couldn’t understand it. Like him, it would be wise to stay away from what you don’t understand.
That said, some people will be rewarded richly for their efforts and investing acumen.
- Investopedia, Why Governments Are Afraid of Bitcoin, https://www.investopedia.com/articles/forex/042015/why-governments-are-afraid-bitcoin.asp
- Countercurrents, American trust in the mainstream media hits an all-time low, https://countercurrents.org/2021/01/american-trust-in-the-mainstream-media-hits-an-all-time-low/
- Katusa Research, Is 2021 the Death of Fiat Currency?, https://katusaresearch.com/is-2021-the-death-of-fiat-currency/
- NASDAQ, In The Dogecoin Economy, Nothing Is As It Seems, https://www.nasdaq.com/articles/in-the-dogecoin-economy-nothing-is-as-it-seems-2021-05-07
- The Washington Post, 3 out of 4 economists predict a U.S. recession by 2021, survey finds, https://www.washingtonpost.com/business/2019/08/19/out-economists-predict-us-recession-by-survey-finds/
- Google Trends, eBay, https://trends.google.com/trends/explore?date=all&geo=US&q=ebay