With the boom in crypto, it is not surprising that mainstream financial commentators will attack it. The question is whether it’s justified.
I think we also need to put it in context that the digital revolution has also delivered the new share app revolution led by Robinhood. This has motivated millions of mainly young people to now gamble on shares. I say ‘gamble’ as thats what it is. My experience is that these people are totally ignorant of professional trading of shares so are just having a punt. It is guaranteed to end in tears as a seriously over bought market, in terms of Price/Earnings, will correct in an ugly way.
So lets talk crypto.
Here we must separate individuals and organisations.
Financial organisations have been slow to get into crypto as the conditions, such as custody, liquidity, regulations, analysts and credibility, did not exist until today. They still don’t exist in many countries or the ecosystem is immature.
Today, I want to talk about individuals as they are accused of ‘gambling’.
‘Gambling’ is ‘playing a game of chance for money. A bet’. It means you not knowledgeable of how to win. Success is based on ‘chance.’
Crypto-traders are a huge group of people in crypto. A few a professional traders knowledgeable of how to trade. They could, and often are, also trading on other assets, such as FX.
The vast majority of people who are ‘trading’ on trading exchanges are not knowledgeable on trading. Or are they knowledgeable on the underlying assets. They are gambling pure and simple.
‘Investing’ is ‘putting money into an asset with the expectation of profit’.
Investment is not gambling as it assumes a knowledge of skill of investing and in the specific asset class. People can either do this individually, by doing it individually with an experienced organisation to help you or to simply providing money to professional investment organisations.
The reality is that they are no professional investment organisations for the public. No ETFs, etc.
Therefore, people are either buying crypto ‘investing’ mainly on their own. And 99.9% have little understanding of investing in crypto. Especially in the underlying assets. They are simply ‘gambling’ that the price will go up. They have no idea about selling targets, diversification, etc.
This is why they are having a punt on anything. It’s why Dogecoin can be worth more than famous blue chip assets like Ford or BP.
Its why the professional financial markets, what I call ‘The Analysts’, are now ridiculing about crypto. The financial markets are advised by a cadre of professional analysts. Professional people who are experts in analysing assets, markets, investing and trading.
They are waving red flags about all crypto. Trying to warn the economy of this unregulated, ignorant speculation that historically has led to massive public losses.
And they are right to do it and the crypto industry is not doing anything about this situation.
Rather than slamming people to punting on ‘shitcoins’ that have no credible intrinsic value that can be crediblity explained to analysts, they promote them. They cheer Elon Musk for promoting them.
And thus all cryptos and all people involved are part of the circus. And they will laugh at us when the market corrects angrily. Because the correction will take all cryptos down and the reputational damage will be all-encompassing.
The truth is that there are a few cryptos with real value. Bitcoin, credible payment coins, credible infrastructure coins, community coins. Coins with underlying technology that will literally change the world.
And there are also millions of people trading and investing in crypto that know exactly what they are doing. They know what they are buying and why.
Bitcoin is a better digital store of value than gold. Gold has a $9trillion market cap with $8trillion value as a store of value. So Gold could easily be a $4trillion market cap with at 20million coins produces a potential coin value of $200,000. Its still new so its inflation hedge value is still not completely in place yet its on its way so a credible purchase with intrinsic value.
Ethereum is the leader of the new blockchain based internet of tokenised assets. Highly credible analytical organisations are predicting a ‘tokenised’ world of $25+ trillion of assets. That will require a massive amount of ‘infrastructure’ currency to pay blockchain fees and other costs.
Buying such assets is not gambling, its new so its speculative investment, just as one would have bought Tesla 5 years ago. You can imagine its potential value.
In summary, an outrageous amount of the crypto world is gambling. The analysts are correct. And the crypto industry is not helping itself supporting the gambling.
What should never be ignored is that there is also a large group of cryptos that are world-changers and are smart investments for everyone today. Its why the big smart financial organisations are pouring into this space. They are not idiots. The smart individual investors just needs to follow their lead, look what assets they are buying [and they are not outside the top 20 at this stage].
The last point is the smart individual should also align themselves with organisations designed not for simple ‘trading’ where they will claim so just help you simply ‘buy/sell crypto easily’. ‘Easily’ means ‘you are on your own buddy’.
At Dacxi, we were designed from the start to support the public exploit this opportunity in an environment of education, information and simple portfolio programmes that only offered the ‘blue chips’ the big institutions were buying. If Paypal is only offering Bitcoin, Ethereum and Litecoin, perhaps that is where the big money is going.
And remember this market is evolving fast. In a few years there will be a flood of exciting tokenised assets to build wealth with. The problem is for the individual, who is going to support you?
Remember when someone says ‘only put into crypto what you can afford to lose’ they are saying ‘have a gamble’. Its the advice given into a casino. Be smart, partner with an organisation that will support you properly and then you will put in the money you ‘cannot afford to lose’ and really focus on building wealth.