Understanding Cryptocurrencies and Their Value

Cryptocurrencies lack inherent physical value, which raises significant concerns for potential investors.

_"Our investments should align with our principles."_ ― Hendrik Vanson Smith

Many of my acquaintances have profited greatly from investing in cryptocurrencies. A popular YouTuber expresses an optimistic view of digital currencies, and it's noteworthy that local retailers are beginning to accept cryptocurrencies as payment. However, the rise of digital currencies complicates financial landscapes.

Just yesterday, I spoke with a chartered accountant who mentioned that many people are eager to double their investments within just a few months—a stark contrast to the traditional investment wisdom found in older literature. This individual clearly hasn't delved into those older texts! Many simply desire quick gains.

How do cryptocurrency scams occur?

Scammers are pervasive in today's digital world. The internet has revolutionized their operations, making them more lucrative than ever before, even more so than during the Viking era. Many of these scammers possess a level of sophistication that surpasses that of typical white-collar criminals, targeting affluent individuals to reap substantial profits.

Every day, new cryptocurrencies flood the market. Enthusiastic investors purchase these currencies while operators acquire them in bulk. This leads to inflated prices. Once they reach their target value, the operators withdraw their investments, leaving everyday investors, like you and me, to bear the losses of our hard-earned money.

Can investing in cryptocurrencies lead to wealth?

It varies. I've witnessed numerous individuals amass wealth through cryptocurrency trading, especially in the early days of the market. However, if you're banking on a repeat of those initial gains, you may be setting yourself up for disappointment.

Investing in established cryptocurrencies like Ethereum or Bitcoin, which have garnered significant trader and investor interest, may yield favorable returns. Conversely, if you're venturing into new cryptocurrencies, it's time to reevaluate your strategy and consider divesting from these risky assets.

It’s not cryptocurrencies that make you wealthy, but rather your investment acumen. Prioritize research and education before committing your funds. Instead of chasing after fleeting riches, strive to build a sustainable wealth-generating system that enables you to learn and achieve substantial returns over time.

Do cryptocurrencies possess any physical value?

What makes gold valuable? Primarily, its perceived worth by others. Imagine owning 1 kg of gold and attempting to sell it, only to find no buyers. In such a scenario, the gold's value is effectively zero.

This principle applies equally to cryptocurrencies. Their value is determined by the dynamics of supply and demand. When demand surges, prices may spike; conversely, if everyone decides to sell, values plummet. Predicting cryptocurrency values a decade into the future is nearly impossible, underscoring the risk of investing in these digital assets.

Cryptocurrencies lack physical value and foundational support, which is why I approach cryptocurrency investments with caution. As a stock market investor, I analyze companies and buy shares based on their business fundamentals, all under the oversight of regulatory bodies.

In contrast, cryptocurrencies operate without such regulation. They rely on blockchain technology and decentralized networks, meaning no single entity governs them. This absence of oversight leaves cryptocurrencies susceptible to misuse; for instance, illicit drug trafficking has been facilitated by the rise of cryptocurrencies. Governments are actively seeking ways to regulate or even ban them.

If preserving your hard-earned money is your goal, carefully consider any investment in cryptocurrencies. They represent a substantial gamble, often leaving individual investors at a disadvantage against larger operators. For the sake of your family and future, it may be wise to steer clear of this volatile market.

Note: This is not financial advice.

Chapter 1: My Reasons for Hesitation

The first video, "Why I Don't Invest in Cryptocurrencies," explores the risks associated with these digital assets.

Chapter 2: The Reality of Cryptocurrency Trading

The second video, "Why I Don't Invest In Bitcoin," provides insights into the uncertainties and pitfalls of investing in Bitcoin specifically.