The theme this week on the Retirement Quick Tips Podcast is: Investments I Hate. 

Today, I’m talking about cryptocurrency. 

With the meteoric rise in value in Bitcoin and other cryptocurrencies in the last several years, and investors like Elon Musk touting their benefits, investing in Cryptocurrencies is something I get asked about a lot more these days. 

But crypto makes it onto my hated list of investments for many reasons: 

It’s difficult to understand. Cryptocurrency is defined as: “a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority.” Even the definition is confusing! Then more research leads you down the rabbit hole of terms like blockchain, digital wallets, mining coins, and…time to move on. 

Warren Buffet’s famous investing advice is to only invest in what you can understand. This is very good advice, yet, I think only about 1% of crypto investors truly understand what they’re investing in. The rest are just joining the crowd. 

But me, I’m going to continue to sit this one out. 

But that’s not the only reason I’m going to wait and see what happens with crypto before I consider it as a legitimate investment option.

Despite Bitcoin being touted as a replacement for gold or even fiat money like the dollar, it simply has a dismal track record as a reliable store of value - it hasn’t been around long enough and in the short few years it has been around, it’s certainly not something that would be considered a stable currency replacement. In fact, NYU Professor of Economics Nouriel Roubini cautioned investors at a recent industry conference not to view cryptocurrency as an effective hedge against inflation (and questioned whether bitcoin and other cryptocurrencies were currencies at all).

He said: “In the case of bitcoin or any other essentially cryptocoin asset, the basis for the fundamental value is not there, it’s vaporware; it’s not backed by anything…They’re not currencies, they’re not even assets, they’re highly volatile, they’re speculative and they’re subject to manipulation of one sort or another.”

And speaking of manipulation, the crypto market is swimming with bad actors. There are a lot of nefarious people who deal in crypto, use it for illicit purposes, and the emerging data on how terrible crypto is for the environment are just a few more reasons why I’m just going to keep saying no for now. 

According to the Web site Digiconomist, a single bitcoin transaction uses the same amount of power that the average American household consumes in a month, and is responsible for roughly a million times more carbon emissions than a single Visa transaction. The same people who are forcing me to drink out of a paper straw that disintegrates before I’m halfway through my drink, and the same people often bragging about how much money they’ve made in bitcoin. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

 

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