Investing in Cryptocurrency is Bad and Stupid

Investing in Cryptocurrency is Bad and Stupid

If you’ve been reading our blog for long, you probably could’ve guessed we think investing in cryptocurrency is bad and stupid.

And yeah, I considered using more expansive words like “unethical” and “speculative” instead of “bad and stupid.” Those words had precision, but lacked panache.

Our Patreon donors vote on potential article topics, and this month they wanted to read our thoughts on investing in cryptocurrency. So we get questions about it all the time! Which isn’t surprising. Relative to cash and traditional investment vehicles, crypto is new and confusing. To make matters worse, there’s so much hype surrounding it in the personal finance world that research feels like reading a data science textbook through a swarm of bees.

Mercifully, we’re not here to explain what crypto is, or how the mysterious blockchain technology works (others have done that intolerably boring work for us). Rather, we’re going to release you from caring about crypto in the first place!

So it’s our personal opinion that investing in cryptocurrency is bad and stupid, and you shouldn’t do it. Here’s why.

Why we think investing in cryptocurrency is bad

Cryptocurrency is terrible for the planet

The senseless and catastrophic environmental impact of cryptocurrency is the number one reason I will never engage in cryptocurrency investing.

  • Bitcoin mining uses more electricity than many countries, and it’s growing every year.
  • A single Bitcoin transaction burns enough electricity to power the average American home for almost three months.
  • A great portion of that electricity comes from burning fossil fuels, which is driving mass extinction, famine, disease, and war.
  • Crypto trading also produces 30,000 tons of electronic waste by driving continuous hardware obsolescence.

Even if they were to address every other qualm I have, I cannot knowingly pour my hard-earned money into an enterprise that burns tangible finite resources to create imaginary digital resources.

I don’t have faith that cryptocurrency is a viable source of wealth. But even if it were, I don’t want money more badly than I want a livable planet.

When we invest money, it’s inevitable that we’ll facilitate further pollution. But if I’m gonna pollute, let it be by creating goods and services that improve lives in meaningful ways that offset their cost—not in the creation of ephemeral wealth for wealth’s sake. I’m not Nero, I ain’t here to play the fiddle while Rome burns.

This is Nero, right?

Cryptocurrency would destabilize world finance

I know there’s a portion of people reading who rub their hands together at this one and say “heh heh, good!”

And I get it. I think our representatives suck and our government is often shitty! People have every right to be furious and seek meaningful change!

But I struggle to think of a more destructive way to express that dissatisfaction than intentional devaluation or disruption of currency regulation. Especially of the American dollar, which has so many foreign bond holders and exchange dependencies that it’s practically an international default currency.

The collateral damage would be unimaginably catastrophic. Think of the the Great Depression, but make it global. Runaway inflation, double-digit unemployment, food and manufacturing shortages, healthcare rationing, armed conflict… Real people would die. Their deaths would’ve been preventable. And it sure wouldn’t be our shitty senators, or the people wealthy enough to speculate on a cryptocurrency investment.

It’s true that our house has a crumbling foundation—but we can repair that. Currency deregulation and intentional destabilization is like taking a wrecking ball to the entire town. What kind of lunatic wants to see that come to pass? Not me.

Cryptocurrency facilitates crime

Anonymity, privacy, opacity, decentralization, lack of third-party or regulatory oversight… a lot of the core “benefits” of a digital currency make it an ideal accomplice in some truly heinous criminal activities.

  • One quarter of Bitcoin users are involved in illegal activities.
  • Virtual currency is the preferred payment method for sellers on the dark web, including human traffickers, child pornographers, drug cartels, hackers, ransomers, kidnappers, and terrorists.

The nature of these crimes really matters to me here. To be clear, we think everyone of sound mind and legal age should be able to sell all the blowies and buy all the magic mushrooms they can handle, with any legal tender!


But cryptocurrency is a blessing for people wanting to commit legitimately harmful crimes. Crypto greatly simplifies the process of accepting, moving, and laundering money. Which makes avoiding detection and prosecution magnitudes easier. That’s not something I want to further incentivize.

Why we think investing in cryptocurrency is stupid

Cryptocurrency is a bad product

Here’s one of the easiest routes to a bad investment as an investor. Ask yourself if people are more excited about owning and actually using the product—or generating wealth from eventually selling the product?

Using bitcoin as intended—as a virtual currency—is a massive pain in the ass.

  • Merchants and stores do not widely accept it.
  • Its value is so volatile that prices fluctuate constantly.
  • Crypto transaction fees are also volatile, and have been as high as $60 or more. What the actual fuck!?
  • Unlike cash, it’s subject to capital gains tax. When you eventually sell it, you’ll owe the gubbernmint up to 37% of its value.
  • You can permanently lose it. If you get hacked, you’re shit out of luck. And we’ve all heard the horror stories about lost keys.
  • You have to sort through one billion scammy, scummy companies to facilitate its buying, selling, and general use on a cryptocurrency exchange. A crypto wallet isn’t FDIC insured, like normal bank accounts. 
  • No regulation also means no protections. If you buy something and your seller never ships it, there is no process to seek redress.

Despite being a terrible product, it does have really devoted adherents. 

Have you noticed that people who are into crypto are really into crypto? And how those people seem eager to talk your ear off about how amazing it is? It’s because the more people who join them, the less risky their “investment” becomes. In other words…

Cryptocurrency is a pyramid scheme

Investing in cryptocurrency? More like "investing in MLMs currently," amirite?!

I know what you’re thinking: How could we say something so controversial, yet so brave?

The only way for cryptocurrencies to grow in value is by recruiting more participants into the scheme. This does two things. Firstly, it creates more scarcity, which raises its perceived value, often making its early adopters rich. Secondly, it conveys legitimacy, which attracts more investors to start investing in cryptocurrency, continuing the cycle. Deflation is built into its very nature.

Can people get rich participating in pyramid schemes? Sure. Fewer than 1% of them, but it happens! The other 99% will break even or lose money. I don’t like those odds.

Get-rich-quick schemes are terrible for poor people, and we never recommend them as a healthy part of any investment strategy.

Market diversification is making cryptocurrency worse, not better 

Usually, competition improves marketplaces. But for crypto, diversification is confusing and hurting the core market.

A lot of my criticism has focused on bitcoins, but there are many other cryptocurrencies. The problem is that legitimate companies with well-thought-out products exist side-by-side with joke coins, garbage NFTs, and fly-by-night scams.

You need to build investments on trust. The crypto market is saturated with terrible diversification. It’s the same problem Amazon is facing, which I described here. If every search leads the searcher to a thousand options for products, and most of them are garbage Chinese knockoffs, you’ll eventually drive away the audience you once held captive.

What truly drives the cryptocurrency market isn’t high-minded idealists trying to revolutionize global fiscal policy. It’s a gold rush of people trying to get rich quick.

Regulation is coming for cryptocurrency

The value of crypto has gotten big enough to attract the attention of that which it most fears and hates: regulatory scrutiny.

The global legal status of cryptocurrency is patchwork and constantly changing. China, once the world’s most prolific bitcoin miner, recently banned cryptocurrencies altogether. And they did so for many of the reasons outlined in this article, namely its environmental impact and the proliferation of criminality. And it’s not the only country!

Investing in cryptocurency in India be like.

Your “investment” in cryptocurrency could quickly become worthless if regulators see fit to do so. Every scam, fraud, hack, and financial crime associated with the cryptocurrency market brings it one step closer to regulatory oblivion.

You aren’t investing in cryptocurrency—you’re speculating

Fundamentally, I wouldn’t even classify money spent buying cryptocurrency as an investment.

It’s speculation.

And I’m not opposed to all forms of speculation! In my roughly $1,000,000 portfolio, I have about $2,000 invested in stocks that are total long-shots. It’s pretty likely I’ll lose that money. But they’re experimental biomedical products. So if they succeed, people’s lives could be radically changed for the better. And that’s a speculation I don’t mind making! Especially when you consider it’s a tiny percentage of my overall assets.

So that’s our take on cryptocurrency. In conclusion, it’s bad for the planet, bad for society, volatile, crowded, and not even a great product to begin with!

On my authority as a certified and ordained Internet Person, I hereby decree that you don’t have to care about cryptocurrency anymore, or feel FOMO for not buying dogecoins! Skip this “investment” and focus your money on the kind of boring, unsexy, modestly productive assets that are much more likely to build stable wealth for you and a better world for the rest of us.

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If you want a deeper dive into any of these talking points, I highly recommend checking out the following articles by Friend of the Blog Tanja Hester. She goes into much more detail, and she’s incredibly thorough and scrupulously ethical. (Isn’t she always?)

And here’s a few more tidbits on related topics…

23 thoughts to “Investing in Cryptocurrency is Bad and Stupid”

  1. Yet another terrific article. When I first heard about Bitcoin the price was maybe $200. I told my friend who was talking about Bitcoin that this was the stupidest thing I had ever heard. Had I “invested” (I put “invested” in quoted because this is not investing: it is gambling pure and simple) I might have made a fortune. Or I could have been ripped off, lost my code or whatever. I have NO regrets. To paraphrase the old EF Hutton advert I plan to make money the old fashioned way: I will earn it.

    I have nothing good to say about gambling. You shouldn’t either.

    1. Hard agree. I am TORMENTED by stories about would-be millionaires who lost access to their wallets. Truthfully, I would rather be consistently poor than know “I was this close!”

  2. I saw a Tweet (I think) that suggested when you find a crypto convert bugging you, ask them to explain it. And then reply, “Ohhhh….! It’s like Kohl’s Cash!”

    That is my plan, although I might say, “Ohhhh….! It’s like tulip bulbs!”

  3. Some additional things to consider:

    Cryptocurrency is terrible for the planet: While Bitcoin on-chain transactions are very expensive, they’re also the most (possibly too) secure. But there are other newer crypto transactions such as layer 2 (bitcoin lightning network) and alternative blockchains with far cheaper costs. For example the average Visa debit transaction costs 23 cents whereas a Solana transaction is currently about 0.025 cents and capable of handling similar load as the Visa network. Also consider how much energy is used by the current banking system with all its buildings, servers, and employees: pretty staggering.

    Cryptocurrency would destabilize world finance: sure if it were taken to the dystopian extremes of some crypto proponents. More realistically it’ll become another of the thousands of currencies/assets but highly geared toward digital applications.

    Cryptocurrency facilitates crime: Bitcoin is a pretty terrible tool to commit crimes as all transactions and accounts are publicly viewable and auditable for all time on its blockchain. Even privacy-focused transactions on protocols like Monero have been traced & prosecuted by the FBI in notable cases. As other law enforcement agencies adopt and institutionalize procedures around crypto, it’ll become very difficult to avoid prosecution for illicit activity. It’s actually kinda surprising crypto has so much support from libertarians because it provides so little anonymity that the authoritarian governments such as China have created state-backed cryptocurrencies to better keep tabs on citizens.

    Cryptocurrency is a bad product: Cryptocurrency is very much an infant technology, like the internet before html. The roots are just getting established and while it’s hard to say if any particular cryptocurrency will reign supreme, first mover advantage and network effects indicate bitcoin and a few other major chains are pretty good bets for growing adoption.

    Cryptocurrency is a pyramid scheme: There certainly is a lot of hype and pyramid scheme shenanigans in crypto. Bitcoin in particular is becoming a lot like the diamond industry with a few individuals and institutions accumulating the mines and inventories making those entities obscenely wealthy by just controlling a surprisingly common piece of rock. I personally am more interested in other more useful crypto projects but can’t deny the game theory aspects of bitcoin will most likely cause further appreciation in value.

    Market diversification is making cryptocurrency worse, not better: Crypto is experiencing something of a dotcom bubble where most cryptos will/have lost all value and only a few Google/Amazon types will survive. It is possible to identify what traits might make a cryptocurrency worth owning though. Things like adoption/network size, number of developers, venture capital, transaction capacities and smart contract capabilities are important traits of leading cryptos.

    Regulation is coming for cryptocurrency: A majority in the space welcome regulation. It will massively drive legitimacy and adoption once clear rules on how to interact with crypto exist.

    You aren’t investing in cryptocurrency—you’re speculating: Buying any asset without understanding it is speculating. Throwing $ at random cryptos is as much a recipe for financial ruin as chasing hyped penny stocks. Doesn’t mean there aren’t massive Google type opportunities in this space. And for those who don’t want to research, even owning a total market index fund provides some exposure as there are already several publicly traded companies involved in cryptocurrencies.

  4. The Michelle is Money Hungry blog had an interesting point on how some are useful for low income areas / area without banks since you can do it all via phone. But unfortunately as you point out, the bad actors / scams make it hard to tell the difference & pee in the pool for all cryptos.

    Related: Line Goes Up
    (Although I must admit I relied on my husband for the TL;DR highlights.)

    1. Black investors have REALLY jumped on crypto and NFTs relative to other investment vehicles! 23% of African Americans own crypto. That statistic bowled me over.

      It’s exciting to me as a signal that this community is gaining more access to—and democratizing disbursement of—investing advice. But I am so worried. I don’t want the poorest people left holding the bag. But if the bottom fell out of crypto today, it seems that’s what would indeed happen… I will definitely read Michelle’s take!

  5. I don’t have all the moral qualms about it but I don’t make speculative investments. Why play the asymmetric risk game if you’ve already won your financial independence? I also don’t play the lottery because its speculative and a negative sum game. It has a lot of moral baggage too, taking poor people’s money and then giving it to me in the form of scholarships for my kids, when I’m way past needing that help.

  6. So glad someone else in the comments mentioned Dan Olson’s Line Goes Up video essay – the single best piece of content on crypto and NFTs in the whole Internet, period. I also recommend Dan’s follow up interview on The Financial Confessions.
    I also would love to add to the conversation this article from the (sadly-defunct) The Correspondent

  7. I used to be pretty skeptical of crypto. Now I’m much more in favor of it. I personally own some. So far made a 50% return. I do think that crypto will eventually be the future. Just not in the form that it’s currently at. And a lot of those issues with it, which you have discussed, would end up getting addressed.

    1. It’s not about U Katy! It’s about the 90%+ people that lose money in crypto. If ur the less than 10% whos lucky enough to make money in crypto. Lucky for u.

  8. I’m starting to see blockchains used with non-cryptocurrency. Do those tend to have the same environmental impact when they aren’t being used for creating more crypto?

  9. In the cryptocurrency space, every four years witnesses a halving event in the supply rate, contributing to the increasing scarcity of assets like BTC over time. This periodic reduction in supply is not exclusive to BTC; various alt coins also adhere to a diminishing supply schedule. The scarcity of BTC, emphasized by its capped quantity, persists, even accounting for lost coins, further reinforcing its value.The value of my ETH,BTC has been sliding forward ,the trading company I work with ,(message via Cryptobinaryexpert@hotmail.Com ) is regularly taking profits, implementing stop-loss limit orders, re-balancing your crypto holdings, and ensuring a diversified investment portfolio for their clients ,making it impossible for any losses to be above 2%.Their style of handling the activities has inherent security feature which acts as a robust defense against fraudulent activities, a sense of trust among its users.

  10. Thanks for sharing. Investing in cryptocurrency can be viewed as a risky endeavor, but it’s also important to recognize its potential as a groundbreaking innovation in the financial world.

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