Since I keep getting asked, here’s my take on…
Cryptocurrencies
It all feels very much like a religion to me. Believers revel in the glorious revealed truth of it. Nonbelievers think they are batshit crazy, and maybe dangerous.
I am not a believer, but I am intrigued.
Currency?
So far, cryptos are too volatile to serve well as actual currencies. After all you are unlikely to spend something you think is going to be worth dramatically more tomorrow. And you are unlikely to accept in payment something that might drop dramatically the next day.
The exception being mostly for criminal activities where the advantages of secrecy outweigh the issue of volatility. Will that change? Some are trying. Time will tell.
For now, cryptos are speculations, and potentially stores of wealth. Unlike a business or a piece of investment property, there is no intrinsic value in them.
Like gold, buyers are hoping in the future someone will pay more for it. So far that’s worked out rather well. But as we all should know, that is no guarantee for the future.
Disaster insurance?
Also like gold, some favor them for disaster insurance against something seriously going wrong in the world.
Of course, cryptos rely on our energy grids and internet remaining intact and stable. So if you are expecting a civilization melt-down, gold in hand might be your better choice.
Then again, if you expect a disaster that has you fleeing across borders — Crypto for the win!
Depends on the disaster you are expecting, I guess.
Energy hogs?
Creating and maintaining these things is breathtakingly energy intensive. Major infrastructure and environmental concerns are being expressed. I realize this is an ongoing debate, but as yet I have found the crypto folks unconvincing.
Too complicated?
These things are insanely complicated, at least for me. I’ve had them explained to me by smart people numerous times and at best I think I kinda maybe get the general idea. Perhaps.
But I don’t believe in investing in things I don’t understand.
By most accounts, I’m a reasonably bright fellow especially about financial stuff. So if it is too complex for me, I doubt most people out there snapping them up have any real concept of what they are buying.
If they are only suitable for an elite who actually understand them, well there you go.
Which one?
There are precisely 12,345,678,901,234,567,890 crypto currencies out there last I checked, although that’s just an estimate.
Assuming crypto is destined to be a real thing in our future and you’d like to stake your claim, just where exactly?
Bitcoin, the Kleenex of crypto?
Or perhaps Dogecoin which started as a joke and suddenly became a real thing. At least until Elon outed it on SNL last Saturday.
Or…?
Well, you have no end of choices.
Governmental backlash?
What about the concern of a governmental backlash as/if these things begin to get real traction? Issuing currency is not just a public service, it is a major source of power. And we all know how willingly governments gracefully relinquish power.
So those are my thoughts, but what do I know? In my introduction in this guest post, How to Invest in Bitcoin like Benjamin Graham, I said…
“Polar bears know more about astrophysics than I know about cryptocurrencies. They probably know more about cryptocurrencies, too.”
My pal Lucas, who wrote that post back in 2017, has promised me an updated one shortly. You’ll get a much more positive take in that. It will be worth a read. Anyone who followed his advice back then would have profited handsomely.
Meanwhile, for balance, here’s Bill Maher, who is noted for being anti-religion of all types, railing against them:
Would I invest? No.
But I might speculate in one with a minor amount of money on the off chance it might explode on the upside.
Remember what is a minor amount of money to you might be a fortune to me. And vice versa. When you read Elon Musk has $5-billion in Bitcoin, put it in context:
That is 3.3% of his $150-billion net worth.
So, good ahead. You have the…
Official JL Collins Seal of Approval
…to invest 3.3% of yours.
Will I? Probably not as I can’t be bothered.
I don’t care. I don’t have to. VTSAX
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My pal Carl and his pal Doug just launched their new podcast Mile High FI. Not sure if the name comes from their location in Longmont CO or from what you can legally buy there.
They foolishly asked me to be their first guest.
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An existential crisis for us travelers.
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