The biggest fear of the general public toward cryptocurrencies is the fear to lose money investing in it.
No day passes without someone telling me that I’m a crazy fool, how could you trust something that doesn’t have a CEO, a management board, a solid market strategy?
The only answer to this is LOL.
The average investor seemingly doesn’t understand risk. Of course any investment comes loaded with risk. And it’s exactly the willingness to bear this risk that justifies the profits the investor hopes to make at the other end of the deal.
It’s true, cryptocurrencies are highly volatile and unpredictable. Are they risky? of course they are. But are they riskier then blue chips?
This is the question a rational investor should ask.
Investment it’s a lot like poker. Given the odds the market offers you, is it smart to place a bet?
Let’s see. Cryptocurrencies markets are totally unregulated. The only force at play in them is offer/demand. Information about the products you’re investing in is more accessible, transparent and accurate that any information you can gather about big public corporations. Of course there’s manipulation going on, but the ratio, intent and purpose of this manipulation (basically big holders of a specific coin or token trying to maximize their profit) can be understood and factored in your rational investment choices.
Then there’s potential for return. Again, like in poker, it doesn’t matter if your odds of getting a straight are thin. If you know your opponent has three of a kind and he’s willing to trow a mountain of chips to you, if the price to pay to see the next card is small enough, the bet is rational.
Today there’s nothing that guarantees profit potential of the magnitude of cryptocurrencies. This is not opinion. This is a fact. Nonetheless retail investors don’t get involved. This is a paradox to me. The best product is dismissed in favour of another one that is orders of magnitude worse. Investment is all about making money after all, right?
Look at the market these days. Big banks are weak. Gold market is manipulated. Money supply and interest rates are decided by central banks. Currency wars are being fought behind the curtains of transnational diplomacy. Government economic intervention is getting heavier by the day. Then, for some reason I totally fail to see, the average investor thinks that, over cryptocurrencies, he has a better chance at profit fighting against Big Banks trading desks, Government and Central Banks.
This is pure madness.
And all of this trouble for what: 10-12% yearly? if you’re lucky and your investment fund does not lose half of your money.
So far for profit potential. But let’s talk about risks. Do you think another big recession is impossible? Or a market crash bigger then the last one? Or currency crisis? Or hyperinflation?
They sure want you to think all of the above has been erased from history by central banks smart money management. But can you really believe a thing like this?
Negative interest rate has never before existed in the economic history of the world. The amount of money central banks poured into the financial system in the last seven years has never before existed in economic history of the world. The level of public, private and corporate debt we have today has never before existed in the economic history of the world.
The only fact a rational investor must acknowledge is this: we are in the middle of a gigantic, unprecedented and untested economic experiment. What are the odds that this whole experiment will come crashing down?
Cryptocurrencies are a smart, cheap hedge against this gigantic risks. Not to get involved is plain stupid.
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