A lot of people are jumping on the cryptocurrency bandwagon. Here is why I am not.
I’ve never been one to follow the trends. In high school, whenever my friends got together to discuss the latest TV show, celebrities, or fashion, I would usually hide in a corner or stay home and just read a book. As an adult I’m not much different, and I’m also the type to stay off the internet when it’s not necessary to do my job. Despite the increasing popularity of cryptocurrency, I am not interested in buying it at the moment, although it is super trendy. Here are some of the reasons why.
Start your journey to financial success with a bang
Get free access to the selected products we use to help us meet our financial goals. These fully verified choices could be the solution to help you increase your credit score, invest more profitably, build an emergency fund, and more.
By submitting your email address, you consent to our sending you money advice as well as products and services which we believe may be of interest to you. You can unsubscribe anytime. Please read our privacy statement and terms and conditions.
1. I don’t fully understand it
At a basic level, I understand what cryptocurrency is – the digital currency that you can exchange or use to buy things where it’s accepted. I also understand that you store it in a digital wallet and that there are specific exchanges where you can buy it. But on a deeper level, I don’t fully understand what causes cryptocurrency to gain or lose value, and the details of why some coins are better than others (other than the fact that they are perhaps better known and therefore more widely accepted). As a rule of thumb, I never buy a stock if I don’t understand how the company behind it makes money – so as an extension of this rule, I think I should stay away from crypto until I learn more about it.
2. I am not convinced that it will become widely accepted for payment.
Although a growing number of traders are using cryptocurrency as a form of payment, for the most part you still cannot buy things with it. I can’t, for example, walk into my local supermarket and cover my grocery bill with crypto. I also cannot use Bitcoin to refuel my car at the gas station. Until I see a wider use for it, I’d rather stay away.
3. The taxes behind it don’t work for me
When I acquire a dollar and then spend it, I am not taxed on that dollar, but if I buy cryptocurrency and use it, I might be subject to income taxes. capital if the value of the currency has increased. I find that I already pay enough taxes, so I don’t necessarily want to invest in a way that will increase my tax burden.
4. It’s volatile
There is no such thing as a risk-free investment. Even so-called safe investments like bonds can lose value if the companies behind them go bankrupt. Whenever I invest my money rather than putting it in a savings account, I accept the risk of loss at some point. And since I invest in stocks regularly, I am no stranger to temporary losses on my brokerage account. But while stocks can be very volatile, so far, from what I’ve seen, the cryptocurrency market is subject to even greater fluctuations. I consider myself to have a fairly healthy appetite for risk, but I don’t know if I have the stomach to invest in cryptocurrency.
The Ascent’s Picks for Top Online Stock Brokers
Find the best stock broker for you from these top picks. Whether you’re looking for a special sign-up offer, exceptional customer support, $ 0 commissions, intuitive mobile apps, or more, you’ll find a broker who will meet your trading needs.
See the selections
Cryptocurrency can be a great investment opportunity for some people, provided they know and understand the risks. But I’m just not a fan, so I don’t plan on investing in it any time soon. Granted, I might change my mind if the market becomes more regulated (which can be a good thing or a bad thing) or if my investment strategy, my finances or my goals change. But for now, I stay away.