Dangers of cryptocurrency adoption

I have a friend, let’s call him Joe, who runs a small restaurant and is really upset about the recent stock market crash. I can’t blame him. We are in the bear market now. It’s ugly. So, what does Joe want to do? He wants to take some of his assets out of the market and bet on everything – God help us – in a desperate attempt to keep his business of cryptocurrency going.

No! Not only that!

It’s literally jumping into the fire from a frying pan. Yes, I am a crypto-cynic. As far as I’m concerned, Bitcoin, Dodgecoin, Etherium, all cryptocurrencies, is a big deal.

Investing company money in crypto is bad enough, but many business owners are considering adopting it as an alternative method of payment – virtually, for scandal.

You would think that General Gers would just go in and buy what you’re selling, wouldn’t you? Well, how skilled are you at setting up a digital wallet? Especially for a mythical coin that is not regulated, rising and falling like a roller coaster and adding levels and levels of complexity and safety concerns. Cryptocurrencies are a major pain to track in your books. Ask your accountant, he will tell you.

Are you sure you want to get around this thing?

Some crypto believers also seem to be realizing this. Bitcoin hit a new 18-month low and dropped nearly 70% from its record high of $ 69,000 in November 2021. As I write, Bitcoin is falling towards 20,000.

Even large cryptocurrency exchange platforms are in trouble. Coinbase cut 18% of its workforce on June 14, or about 1,100 jobs. Meanwhile, Coinbase owners Co-Founders Brian Armstrong and Fred Ehrsom, President and COO Emily Choi and Chief Product Officer Surjit Chatterjee, have literally cashed out. Money, not crypto, is about $ 1.2 billion in revenue from stock sales.

Another top crypto exchange platform, Celsius Network, has closed its virtual doors. Good luck getting your money back!

So, my friend Joe is back. A small restaurant is always a chance business in any economy, and he has had real problems hiring and hiring staff. So he hopes to be able to quickly convert a declining stock portfolio into cryptocurrency, win big, then cash out to keep his business afloat with earnings.

This will not work. She knows I feel that way. But he is bound and determined.

One of my oldest financial rules – and as far as people go for companies – is that something that looks too good to be true is good to be true. In the 2000s, I had friends who were convinced that Bernie Madoff would be able to deliver a 20% return every year forever. In the largest register scheme so far, Madoff admits he has not actually been in business since the early 1990s. It was all a conf.

But so many people want to believe in magic money. We think that if we lay our hands on that swan laying golden eggs, buy the right tulips, trust the right Miracle Man, or invest in wonderful, mysterious cryptocurrencies, we will be rich. And all our problems will be solved.

I’m sorry. It doesn’t work that way. It will never happen.

Speaking at a recent TechCrunch conference, Bill Gates said that non-fungible tokens (NFTs) are “based on a 100% larger fool theory.” It is true that the price of overly valuable assets will rise unless enough fools are willing to pay for them. He doesn’t believe that “expensive digital pictures of monkeys” are good investments. Gates was not so strict about cryptocurrencies; He said “a farm where they have output, or like a company where they make products.”

For once Gates and I agreed on something. No matter how much financial trouble you or your business may face, Crypto or NFT Snake Oil will not save you. Hard work and real investment is your only real hope. It was the same as it was.

Copyright © 2022 IDG Communications, Inc.

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