Matt Damon is among several celebrities who lend their fame to cryptocurrencies. Photo / Supplied
OPINION:
For perfectly logical evolutionary reasons, every sensible person wants to get rich without actually doing anything. This, together with the volatility of the stock markets, the increase in inflation and the lack of vacations abroad to spend our money
On, it means that investing money in cryptocurrencies has become an increasingly popular hobby. Is this a prudent way to take advantage of the future of money? Or a futile attempt to get on a wagon that has already passed the lights and passed the next McDonald's?
Although everyone has heard of cryptocurrencies, no one I've met seems to really understand how they work. Fortunately, I am well placed to guide you in this important area, as I can not only operate a personal computer, but have also spent several years working in a casino. Both play their part in gaining a reasonable understanding of crypto for anyone without a Nobel Prize in "The Economic Implications of Blockchain for Financial Gain."
Has the ship sailed?
If he had put a good amount of change into Bitcoin in 2005, he would have undoubtedly made a lot of money. Similarly, if you had bet on all the winning horses at Ellerslie at the same time, you could have retired to a small village at Ponsonby. Financial decisions, like most of life, are much easier in the rearview mirror, but just because something has worked well in the past doesn't necessarily mean it will do well in the future. Just ask the England cricket team. Or anyone who bought tulips in 1636.
Energy consumption
The idealistic vision of cryptocurrencies as some kind of hippie alternative to government-controlled currencies is somewhat clouded by the ridiculous amount of energy they consume. For some reason beyond my limited level of understanding, each Bitcoin transaction (for example, buying a coffee) consumes enough energy to power a family home for six weeks. Bitcoin as a whole consumes more energy than Finland each year. If everyone used Bitcoin the same way we use dollars, the world's energy grids would collapse before you can say "don't worry, Doge Coin is up 5 cents this week!".
buyer beware
Maybe it's just me, but I found it a little worrying that the country with the most Google searches for "Bitcoin" turns out to be Nigeria.
Equally disturbing was the Yahoo Finance article titled: "Seven of the Biggest Bitcoin Crashes in History." An accident is unfortunate. Seven seems like an extreme oversight.
Another problem is the millions of dollars that go missing annually when careless cryptocurrency holders forget their passwords. Money disappears forever into the black hole from which it came. Unfortunately, they won't reset your password, even if you tell them your first pet's name was Satoshi Nakamoto.
The cryptocurrency fan club
There are two groups of people who are always beating the drum for cryptocurrencies: Firstly, the hundreds of cryptocurrency exchanges whose only source of income is their transactions. The cryptocurrency exchanges appear to be targeting โbrotherโ investors and advertise themselves as โendorsed by Kevin Durant and Odell Beckham Juniorโ, as if having B-grade sports stars as shills provides any kind of financial legitimacy.
The other group of supporters are those who have already bought and desperately need the rest of us to get involved to increase the price of their own shares. It is unlikely that either group will give you a balanced view.
As useful as a one-legged man in a kick-ass contest.
While some businesses will accept cryptocurrency as payment, often just Bitcoin, this is still relatively uncommon. The people who use cryptocurrencies the most are often criminals who find them useful for the transnational movement of money without having to go through bothersome banks that are required to report such transactions. The growing number of companies subject to ransomware must pay in cryptocurrencies, which for some reason often end up in Russia.
What will governments do?
The Chinese government has already moved against cryptocurrencies, declaring all of them illegal, banning their production, and introducing a state-controlled alternative.
As other governments become increasingly irritated by criminals walking away with ransomware proceeds in crypto, it would not be surprising to see more enforcement measures taken. Cryptocurrencies threaten the position of world currencies, particularly the hegemony of the US dollar. This is unlikely to be popular with the US government, which uses monetary policy as a key method of controlling the economy.
FOMO
Without a doubt, the most logical reason to put money into crypto is FOMO, as we all live in fear of our friends making money while we miss out. So, if you'll excuse me, I'm going to ask my advisor which cryptos I should be looking at this week. Who knew Matt Damon knew so much about blockchain?