Better go to a casino. Five Reasons Why Cryptocurrencies Are Gambling, Not Investments
Today, not only economists and analysts talk about bitcoin. Also, taxi drivers, and even teenagers, whose only financial resource today is pocket money, are talking about bitcoin with might and main.
Bitcoin has gradually evolved from a mysterious toy for wealthy geeks into an investment method that is increasingly being chosen by people who are very far from technology.
Some other cryptocurrencies are already able to match it in popularity.
Moreover, new cryptocurrencies appear almost every day.
And many people get the feeling that cryptocurrencies are the new dominant trend that will soon bury traditional money.
At the same time, many respected economists point out that cryptocurrencies, deprived of the support of large states and banking systems, are just a bubble. And investing in them should be viewed as a gamble.
Any attempt to predict the bitcoin rate is akin to trying to guess the next winning number in roulette.
In this article, we’ll look at the most popular arguments for the claim that cryptocurrencies are just a form of gambling in today’s digital world.
Are cryptocurrencies a gamble, not a financial investment?
1. Unclear future
Some experts call cryptocurrencies a direct and clear threat to the most influential world currency — the US dollar.
In this regard, it is very likely that the US government may prohibit the use of cryptocurrencies in the foreseeable future.
It would seem that this is nonsense. But analysts point out that during the Great Depression, the United States did not hesitate to take such drastic measures as banning gold.
President Roosevelt issued a decree that effectively meant the confiscation of gold from private individuals. All citizens were required to exchange their gold for paper dollars within three weeks at a strictly established rate. All contracts and obligations in which gold appeared as a means of payment were declared invalid.
All payments in the United States were to be made strictly in paper money.
The gold seized from citizens was sent to the vault of the Federal Reserve System (the famous Fort Knox in Kentucky).
Roosevelt justified his actions by fears about the possible export of gold abroad and the subsequent collapse of the US economy.
Of course, in the modern digital world, it will be a little more difficult to ban something than in 1933. However, a direct ban on cryptocurrencies (and, consequently, settlements in them, transactions from dollars to cryptocurrencies, and vice versa) will lead to a colossal collapse of their value.
Bitcoin is already banned in South Korea. The Indian authorities are also very close to banning cryptocurrencies. In general, China gave bitcoin a real Armageddon.
2. Doubtful growth
One of the factors spurring the growth of interest in cryptocurrencies is their unrestrained growth. Hundreds of percentages in a couple of years are extremely beneficial for investors.
However, unlike the dollar, which is backed by the power of the American economy and the printing press, there is nothing behind cryptocurrencies. It seems to you that this is a good investment because they have been growing so far. But if nothing happens to the dollar for sure, then cryptocurrencies can collapse at any moment. Bits and bytes on servers located unknown where do not have any confirmed material value.
Tweets of famous personalities on social networks and other factors that are difficult to foresee have a huge impact on the value of bitcoin and other cryptocurrencies.
Financial analysis tools and other attributes of weighted investment are inapplicable here. From this point of view, cryptocurrencies are pure gambling, a bet on luck.
3. Lottery that pretends to be an investment
If you do not suffer from gambling addiction, then usually take with you to the casino about the amount that you can part with without much regret.
You don’t bring money to the gambling table that you put aside for your children’s schooling. You are not borrowing money from relatives to “invest” it in the next round of blackjack (again, if you are not a gambling addict).
No one in their right mind considers gambling to be an investment. First of all, because casinos do not disguise themselves as financial institutions that increase your capital.
Casinos openly position themselves as places where you can have fun losing money. Going to the gambling hall, you take these conditions for granted.
But with cryptocurrencies, everything is different. The platforms for working with them are disguised as brokerage and financial instruments.
Everything here is arranged so that it seems to you that you are working with real money, and not gambling chips.
Nothing here indicates risks and “fun”.
For many people, this feigned seriousness directly indicates that they are not playing games here, but investing their money in the future.
Simply put, more and more people are starting to think that cryptocurrencies are the very “money” in which you can keep funds for the education of your children.
Meanwhile, many experts openly say that investing in bitcoin and other “crypto” can only be the money that you are willing to lose.
In other words, you should treat cryptocurrencies like a game of chance.
4. Lack of idea
Money has a very clear concept. The US government, for example, guarantees certain collateral for the dollar.
Gold and other precious metals have a clear concept — they are in demand as an alternative to money, with constant demand.
When it comes to cryptocurrencies, there is no clear concept here.
The famous scientist, economist, and mathematician Nassim Taleb formulated this idea in this way: “Investments in cryptocurrencies are based on the idea that a certain group of people can earn at the expense of society, simply because they have a privilege — the world accepted their currency and not some other “.
5. No one to complain to
As a rule, one of the main complaints of unsuccessful gamblers to casinos is that there is no one to make claims.
They say that the casino is spinning the roulette wheel, but you win or lose, there are no guarantees, and even the casino itself cannot influence this.
According to former UK Treasury Secretary Jim O’Neill, cryptocurrencies are something similar.
Unlike ordinary money, behind which is monetary policy as an element of macroeconomics, in the case of Bitcoin, everything is different.
“Why should we cede monetary function to some anonymous or amorphous force, such as a decentralized accounting system,” muses O’Neill. — And one that limits the total supply of currency, thereby guaranteeing its constant volatility?