To bet, or not to bet?
That’s the question I ponder on my couch, browsing reddit on my phone. It’s the same question a lot of people are wrestling with now, especially millennials like me who’ve largely missed out on the stock market. A couple of my husband’s friends are working me pretty hard.
“Do it! Go crypto!”
My entire life, I’ve never had money to invest anywhere. I’ve cashed out my 401K twice in order to pay off debt that was making it impossible to put a down payment on a decent car, or a house. It’s kind of hard to plan for retirement when you live in a shitty apartment with loud, alcoholic neighbors. Now thanks to hard work and luck, and cashing out my 401K again, I have enough to invest pretty heavily in the cryptocurrency market. All I have to do is pull the trigger. My brain tingles.
Should I, though? And should you?
I think the answer is probably not. If it were yes, I would go with ethereum, because the r/wallstreetbets crew is about to send that one soaring — and it’s still somewhat affordable. They have a lot of energy after the GameStop raid on hedge fund managers, and they’re very pissed off. They’re falling hard for decentralized finance. But I wouldn’t, and I’m not.
Here’s why. But first…
Let’s start with the arguments in favor of taking whatever cash you have and sticking it in the crypto market.
Inflation is going to murder us in our sleep.
First, a lot of financial wizards out there are predicting that inflation will just kill us over the next decade or so.
That’s what happens when governments like the U.S. work alongside the Federal Reserve to make trillions of dollars suddenly appear. It saves a lot of people in the short term, but in the long run all that extra money drives up prices. That means things like groceries get more expensive, along with appliances and cars and, yes, homes.
That’s not great.
We’ve been forced to play the investing game.
Our spending power is dropping. Our wages are staying the same. Things have been this way for a long time.
Stagnant incomes have made investing something of a requirement. It’s the only way to protect your hard-earned money against inflation. And yet, a lot of us don’t want to have anything to do with the stock market. So we’ve opted for safer options like treasury bonds and CDs.
Just a little problem with that…
Interest rates have gone down the toilet.
The Federal Reserve decides the going interest rates. So if the economy isn’t doing well, then safer investments suffer.
I know.
I’ve currently got $20,000 sitting in CDs for my kid’s college. The interest rates on those have dropped from about 3 percent down to half a percent last year, when they rolled over. So money that was making me several hundred dollars a year is now earning pennies.
It sucks.
Cryptocurrency feels like the only way.
Any ordinary person with money to invest faces a tough decision. They can risk it in stocks, with a return rate anywhere from 4–10 percent depending on how you invest. (Some people promise higher.)
According to some financial experts and economists, that’s barely going to keep pace with inflation.
Or…
You can invest your money in a cryptocurrency, and watch it potentially triple or quadruple in value in a few years. Some experts predict bitcoin could even go as high as $600,000 by the end of this year.
It’s intoxicating to think about.
As someone who grew up in relative poverty, I never dreamed of having $600,000. Nobody in my entire family tree has ever come across an opportunity like crypto, much less possessed the means to take advantage of it. I’ve had uncles who tried, and they wound up broke.
If there’s one thing I’ve learned from watching people get worked up over investment opportunities, it’s this…
There’s something I wish more people knew, something I’ve learned from lots and lots of experience:
You make bad decisions when you’re excited.
So don’t do it.
Good decisions come from a place of calm certainty. Bad ones come from an excess of emotion. When it comes to cryptocurrency, I always feel an excess of emotion — good and bad.
That sends me a clear message.
Stay away.
There’s a lot of reasons to avoid the cryptocurrency market altogether, which is what I’m going to do:
Cryptocurrency has gone haywire.
Cryptocurrency wasn’t designed to be an asset. It wasn’t meant to be traded and hoarded like stocks.
And yet, that’s how people treat it…
Read any book. Watch any movie. When you pervert something from it’s original purpose, things don’t turn out well for anyone.
Watch Gremlins. You’ll understand.
Greed is driving a bubble.
People aren’t investing in crypto because they want to buy and sell things in that currency. They want to cash out at the right time and become millionaires or billionaires.
That’s how bubbles work. Nobody actually believes in what they’re buying and selling. They’re just trying to get rich as fast as possible. They know the last person who invests is going to get screwed. We’ve seen this play out for hundreds of years, ever since the dutch tulip bust.
Bitcoin is just the latest tulip.
If the only way to make money off something is to get in and get out before it crashes, that’s a bad investment.
The risk isn’t worth the gain for most of us.
If you have enough money to buy a couple of bitcoin, then odds are you’re doing pretty well financially. You can probably afford to secure a nice home for a reasonable mortgage.
So do that.
Billionaires are driving the latest crypto boom. They have the disposable wealth to buy up lots of bitcoin as a safe haven from inflation. That’s exactly what they’re doing. They can afford the risk.
And then there’s the people with only a few thousand dollars in the entire world, the ones who think investing in cryptocurrency will rescue them from a life of chaos and uncertainty.
It won’t.
The money you lose from interest pales in comparison to the money you could lose if your crypto goes bust. Meanwhile, the money you gain won’t be enough to change your life. It wouldn’t change mine much.
It just feels that way.
If you’ve got a little money, you’re better off investing it in skills. You can buy books and learning materials. You can take courses. You could take time off between jobs to explore new careers. A few thousand dollars is money you have to pay your bills while you figure out what’s next. So if that’s all you’ve got, my advice is hang on to it for now.
Instead of buying a bunch of bitcoin, I’m going to finish paying off my house, because that gives my family a place to live no matter what happens over the next couple of years. That’s priceless.
In the end, money buys you a little bit of freedom, and that’s the most valuable thing in the world.
Don’t gamble with it.
Everything is moving faster now. The roaring 20s was a decade, but this roar could last a couple of years. If you’ve got money, then what you really have is time. Use that time to invest in yourself.
If you’re not rich, your best bet in this world is to be the kind of person who can demand higher pay for your work.
Don’t invest in assets.
Be the asset.
