FOR quite some time now, I had been very keen to write an article about why people should not put money into cryptocurrencies. But I was told to hold off on it a bit considering that crypto was all the rage during that time and some popular financial planners were even endorsing it. Now that this foolishness has unraveled and I have finally been permitted to write about it, let us start tearing it apart.
The other week, a friend told me that despite the ups and downs of cryptocurrencies, the returns are still quite high. Bitcoin for example is said to have a return of 4,686 percent in the past five years. Despite this astronomical returns on cryptocurrencies, why am I still skeptical about it? Why am I not willing to put a single cent on it and why do I speak so negatively about it? Here’re why.
What is worst is that there is no way of knowing if it is a real hack or an insider’s hack just passed off to make it seem like an external hack just to steal money from gullible people who put money into this. Further, there is just too many alleged “hacks” and “mistakes” that has happened in crypto transactions.
Late last year, I read that a crypto exchange mistakenly sent about $400 million to the wrong recipient. Mistakes such as this are commonly reported in the crypto space; makes you think how on earth can you trust these people with your money.Cryptocurrencies are energy-intensive. The process of “mining” for cryptocurrencies requires a significant amount of computing power and energy.
In conclusion, while the underlying technology in cryptocurrencies, the blockchain, have the potential to revolutionize certain things in the future, cryptocurrencies itself are not worth putting money into because of the above-mentioned reasons.Zigfred Diaz is a Cebu-based registered financial planner of RFP Philippines. Aside from practicing law, he is a licensed environmental planner, real-estate broker and appraiser.