Since 2009, when Bitcoin initially emerged from the innards of an unknown engineer's computer system, it appears as though cryptocurrency has been dismissed as a meaningless craze.

While some of the criticism has come from members of the general public who may not understand what cryptocurrencies are, how they work, or why they have any value at all, some extremely astute financial minds have also cast doubt on crypto's burgeoning importance.

One such opponent is billionaire investor John Paulson, who recently described digital currencies as a bubble that will "ultimately prove worthless."

The volatility in cryptocurrency markets during the last few days — Bitcoin fell by 17% at one point on Tuesday, the same day El Salvador began adopting it as legal tender — does little to defend Paulson's criticism.

Let's see what his beef is with crypto and whether you should sell or buy the dip.

Paulson's justifications for being pessimistic on cryptocurrency

Paulson has a track record of revealing at least one high-profile financial swindle. As a co-founder of the Carlyle Group, he was one of the hedge fund titans who identified the subprime mortgage industry's corruption and consequently shorted the US housing market before it crashed in 2007, earning himself an estimated $4 billion.

And he appears to be equally dubious of crypto.

“I would not encourage investing in cryptocurrency to anyone,” Paulson stated during a Bloomberg Wealth with David Rubenstein Bloomberg TV broadcast.

“I'd characterise them as having a finite supply of nothing. Thus, to the degree that demand exceeds supply, the price would increase. However, if demand declines, the price will fall. There is no fundamental value to any cryptocurrency other than the fact that there is a finite supply.”

It's also worth considering how much true value an item may have when its price can move so dramatically from minute to minute, as Bitcoin's price did on Tuesday. According to CoinMarketCap's calculations, the total cryptocurrency market lost approximately $300 billion in value between Tuesday morning and Wednesday afternoon.

This level of volatility is reminiscent of the early 2000s dot-com bubble and the housing catastrophe from which Paulson previously benefitted. Both were the outcome of billions of dollars of uninformed money being attracted to useless properties.

Paulson continued by stating that cryptocurrencies may eventually lose their value.

“Once the euphoria subsides or liquidity dwindles, they will fall to zero. I would not encourage investing in cryptocurrency to anyone,” he stated.

The Bitcoin's flip side

As Bitcoin prices fell on Tuesday, at least one investor took advantage of the drop: El Salvador.

Bitcoin's collapse on Tuesday came at an inconvenient time for the Central American republic, which was just announcing its intention to embrace bitcoin as legal tender. Despite the uproar, El Salvador purchased 150 additional Bitcoin on Tuesday morning, when values were falling.

Nayib Bukele, El Salvador's president, definitely sees more value in Bitcoin than Paulson does. However, his — or anyone's — decision to purchase a volatile asset as its value plummets is about as dangerous as investing gets.

Bukele tweeted Tuesday morning that he purchased his 150 new coins at 11:15 a.m. (Since Twitter posts are immediately timestamped in their local time zone, this would be 11:15 CST or 1:15 EST.) If he captured them within an hour or two of the tweet, El Salvador certainly acquired their 150 coins for around $51,000 each.

The issue is that Bitcoin devoured it following the purchase. It was selling for $46,927 at 4:15 p.m. on Tuesday. It plummeted to little over $44,000 in the early morning hours of Thursday before recovering to over $46,500 by 4:00 p.m.

That is the snag with purchasing the dip. You never fully know whether anything is a dip — or a trough, or a Marianas Trench-sized pit of horror — until enough time has passed to allow for hindsight.

Participate in the game

Whether you consider cryptocurrency as the currency of the future or a short-lived get-rich-quick gimmick, there are numerous ways to put your money to work for you.

Concentrating on assets that generate cold, hard cash is an excellent place to start for risk-averse investors.

For example, certain prominent investing services enable investors to secure a continuous rental income stream through investments in premium real estate holdings ranging from commercial complexes in Los Angeles to residential buildings in New York City.

You'll have exposure to high-end properties that are often only available to big-name real estate moguls, and you'll earn consistent dividend distributions on a quarterly basis.

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