What about crypto?

A question that I’m fielding more and more lately is “what do you think about cryptocurrencies like Bitcoin, Ethereum, etc.?” I have a long answer for this question.

I am all about diversification, so if you want to put some money into crypto, I think that’s fine. However, I don’t believe that crypto is a legitimate investment/asset class as crypto doesn’t actually do anything. Contrast it to a business that generates income, has assets, and is legally required to report to shareholders, such as McDonalds. Crypto does not do any of this, which makes it more akin to ‘investing’ in comic books, baseball cards, stamps, Rolex watches, etc. There is nothing wrong with any of those latter items, as people that buy those items generally receive joy from them, giving them assets which are psychologically positive. But you can’t touch, feel, or do anything (aside from trade) with crypto, which also makes it different from gold, silver, and platinum which you can physically hold AND they all have industrial applications.

Almost daily now I receive emails from companies trying to get me to sign up with them so that I can assist clients with buying/selling crypto and get compensated for it; this is not something I’m interested in doing. Instead, investing in companies that are implementing and/or benefitting from blockchain technology (which, among many other things, also facilitates the ownership and trading of cryptocurrencies) makes a lot more sense to me, and most people already have many of these stocks (e.g., Nvidia, AMD, Microsoft, to name a few) individually and/or in mutual funds and ETFs. These and other companies make money from the technology under which cryptocurrencies operate, much like if you owned a comic book store, which can be a lot more lucrative than owning an asset that trades purely on speculation.

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