It’s not just investors in Crypto who are fools. Lazy journalists can run them close.
This editorial from The Guardian suggests that the endless rise in the prices of cryptocurrencies are a monument to greed and gullibility. It sees bitcoin and altcoins as fools gold and concludes that when the bubble bursts, only fools will remain.
My view? This is lazy journalism. The writer is as guilty as anyone who ploughs money into any form of investment without sufficient research, on the basis that this is a poorly considered piece of writing.
No doubt, people are recklessly investing in cryptocurrencies in droves, on the basis that they see an opportunity of money for nothing. But equally, journalists are guilty of jumping on the bandwagon too, in the pursuit of subscribers, pageviews and ad revenues. This new tech is the hot thing, so it needs to be covered. The established press is full of articles on the sector. And the writers of many of them, like a lot of investors, haven’t done their spadework.
Yes, we are in a bubble, which is pumped up by those looking for a quick win. That is the nature of bubbles in any market. I don’t know how close that bubble is to bursting. Who knows? In 10 mins? In four years? After it’s grown two fold? Or two thousand fold. No one knows.
Of course, it will burst. I’m under no illusion that the current value of the three portfolios I manage will at some stage be much lower than they are today. But that’s fine. My capital is already withdrawn from two of these. And from these I have already taken double the annual percentage target profit I set as an income in just eight months (a modest 10%). The third has only been up an running a week, but the money which is invested in that I can afford to lose. It wouldn’t be invested otherwise. The portfolios are diversified. I don’t think that marks me down as foolish. I will lose no more to Cryptocurrencies than I did to RBS when I invested in shares pre-2008 when the bank was being run atrociously in the background by Fred the Shred.
I am also learning far more about the sector through my research. And there’s a value in that. I’m sure, that as someone who works in tech that at some stage I’ll be involved in some level of blockchain development which isn’t just judged on whether I can go spend those tokens in Tesco. There are many more like me.
The article suggests everyone who invests is a fool, because it assumes an end game in which there are only losers, ignoring the reality that in any market there are always winners and losers.
It goes on to state:-
Ethereum is not a real currency, and neither is bitcoin; nor are Ripple, Monero, Litecoin, Dogecoin, or any of the other thousands of cryptocurrencies that are the focus of intense speculation today.
Whether they are currencies or not (and many of them clearly are designed not to be) what they do have, right now, is a value. The value of anything, at any given time, is the price someone is prepared to pay. Whether that’s good or bad value is an irrelevance. Value judgements are very subjective and the extent to which we walk away from any deal favourably or otherwise depends on how we recognise that, applying to each transaction our knowledge, beliefs and attitude to risk.
The following quote shows the writer has made the mistake many have made by assuming that the model for some blockchain projects is the model for them all.
There is even less reason to trust software developed by small teams of programmers who hope both to become insanely rich and to circumvent all efforts by governments to control them — and that is how all cryptocurrencies have been built.
There are plenty of projects where access is open to all and code available as open source. OK, there may be a skills premium to participate, but it’s not all a closed book.
Of course The Guardian is quite happy to run ads next to its editorial which look to draw people into investing into Crypto. Why else would it have written the article one wonders? It needs relevant content against which to run those units, or leave a big wedge of money on the table. The hypocrisy is stunning!
